Auto wholesales declined in July as supply-chain constraints persisted and fresh lockdowns imposed amid mounting cases of the coronavirus, according to four brokerages, extending a lengthy slowdown in the sector.
Factory-gate shipments of passenger cars, two-wheelers and commercial vehicles are likely to tumble in the range of 3-71% year-on-year in July, according to data compiled from the reports of four brokerages—Nomura, Emkay Global, Motilal Oswal and Dolat Capital.
All segments, barring tractors, witnessed a decline in sales over the year ago. Tractor demand, analysts said, remained strong on account of early Kharif sowing, easy vehicle finance availability and higher yield.
Wholesales for most automakers, however, surged over the preceding month as rural demand improved and people opted for personal vehicles to minimise risk of infection.
India's automakers have been trying to push sales since the Diwali festival season in 2018. First, an increased upfront insurance cost, coupled with a broader consumption slowdown and disruptions caused by BS-VI emission norms, hurt sales. Then the nationwide lockdown to combat the Covid-19 pandemic completely stalled operations at companies and dealerships. The automakers had witnessed a complete washout in April. Sales slightly improved in May and June as restrictions eased.
Retail Sales
Even as retail sales picked up over preceding months, not all dealers witnessed the same.
Cities or states where lockdown restrictions were lifted from June have seen most of the pent-up demand being absorbed, said Nikunj Sanghi, managing director at JS Fourwheel Motors Pvt., a Rajasthan-based dealer of Hero MotoCorp Ltd. “As a result, July compared to previous month has been softer, but it is not very surprising as second quarter is a relatively lean period.”
But R Chandrashekhar, executive director, Regent Honda & Kamal Hyundai—a Mumbai-based dealership, saw a positive momentum at his dealerships in July. “Repeat customers enquiry levels is a positive,” he said. “Commercial vehicle sales continue to remain under pressure and are yet to see a pickup. We are expecting further improvement in passenger car business in August.”
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