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Despite rising covid-19 cases, sales of PVs and CVs continue to grow in March

Sales volumes are expected to grow by 4.3%, 22.8%, or 8% on a month-on-month basis for Maruti Suzuki, Mahindra and Mahindra, and Tata Motors, according to analysts of Motilal Oswal. (Ramesh Pathania/Mint)Premium
Sales volumes are expected to grow by 4.3%, 22.8%, or 8% on a month-on-month basis for Maruti Suzuki, Mahindra and Mahindra, and Tata Motors, according to analysts of Motilal Oswal. (Ramesh Pathania/Mint)

  • Stocks at dealerships for passenger vehicles continue to be around 10-15 days owing to high demand and the lack of supply due to issues in the supply chain network, according to analysts of Motilal Oswal Institutional Equities

Despite the rise in covid-19 cases in key states such as Maharashtra, Kerala, Karnataka, Punjab, and others, retail demand for automobiles, especially in the passenger and commercial vehicle segments have continued to grow. The demand for two-wheelers, especially entry level one continues to remain subdued.

According to analysts of Motilal Oswal Institutional Equities, stocks at dealerships for passenger vehicles continue to be around 10-15 days owing to high demand and the lack of supply due to issues in the supply chain network. On the other hand, two-wheeler dealers are sitting with stocks for four to six weeks since demand has slowed.

“Strong demand for passenger vehicles sustained in March 2021. The waiting period is still high across OEMs. TTMT (Tata Motors) is benefiting from its existing range of vehicles (Nexon and Altroz). Customers prefer CNG models over petrol, given its lower running cost, with MSIL benefiting from the same. Volumes are expected to grow by 4.3%, 22.8%, or 8% on a month-on-month basis for Maruti Suzuki, Mahindra and Mahindra, and Tata Motors," said analysts of Motilal Oswal in a note on Monday.

Due to rising cases of covid-19, the government of Maharashtra has already imposed local lockdowns and night curfews. According to industry executives, such measures due to resurgence in cases could impact customer sentiment going forward.

Commercial vehicle sales, though, are continuing to recover after two-and-a-half years as infrastructure and manufacturing sectors have shown signs of growth in the last few months and are expected to improve going forward.

“Demand for medium and heavy commercial vehicles from the infrastructure segment remains strong, even as the cargo segment is catching up. Discounts have fallen by 4-5% to 10-13% from December 2020 levels due to improving demand and supply-side issues. M&HCVs now have a waiting period of 30 days due to supply-side constraints (for most parts, including semiconductors), which was not there two months back," added the analysts in the note.

They further added that the demand momentum has largely sustained across segments excluding two-wheelers in March. However, the recent price hike announced by automakers to cover rising commodity prices may have had some impact on demand. Inventory is much lower than normal for passenger vehicles and tractors due to strong demand, leaving headroom to fill inventory in the coming months

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