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Passenger vehicle makers reported a modest drop in despatches to dealers in November from record sales in the festive month of October, as demand remained strong and companies struggled to fulfil customer orders.

However, for two-wheeler makers, factory-gate shipments declined significantly in November from the preceding month, with the moderation in demand more visible in the case of motorcycles than scooters. However, sales volume rose in double-digits from the year-ago period for both passenger vehicles and two-wheelers because of last year’s low base due to chip shortages and weak rural demand.

The sharper slowdown in motorcycle sales than in scooters underscored the fact that rural demand has been sluggish. Rural households typically prefer to buy motorcycles, while demand for scooters is mostly seen in towns and cities.

Honda Motorcycle and Scooter India, which is stronger in the scooter segment, saw November sales grow nearly 40% from a year earlier, while motorcycle makers such as Hero MotoCorp, TVS Motor Co. and Bajaj Auto saw sales grow at a much slower pace.

Automakers across segments are expected to taper production to manage stock at the end of the year when customers seek heavy discounts as dealers look to liquidate stock ahead of the new year. This time, the implementation of BS-VI phase-II norms from April next year is an additional factor that automakers will have to account for, potentially slowing down sales in the next couple of months as the changeover takes place.

Passenger vehicle wholesales grew 31.5% from a year earlier to 322,000 units in November.

“This indicates a very good bounce-back post-covid. Sales from April-November in the ongoing fiscal totalled around 2.6 million against 1.9 million last year, which is a growth of 37%. In the current calendar year, wholesale passenger vehicle shipments have crossed 3.5 million units in 11 months against 2.8 million last year - that’s a growth of 24.5%. We expect total industry volumes in the calendar year should reach 3.8 million units in December, much higher than the previous high of 3.38 million in 2018," said Shashank Srivastava, executive director at Maruti Suzuki.

“Pending bookings for Maruti Suzuki currently stand at 374,000 units. At an overall level, semiconductor availability got better, but some models are impacted, including some variants of the Dzire, Swift, Baleno, Brezza and Grand Vitara. Inflation is sticky, and high-interest rates are starting to reflect in retail lending rates as well for wholesale financing, so we have to be watchful of that to size up future demand," Srivastava said.

He added that the stock in the industry at the moment is 246,000 units, which is built over the beginning of the month from 208,000 units as retails lagged wholesales in November. However, while there is an addition in the stock, it still only accounts for 20-22 days of inventory. Maruti Suzuki doesn’t expect production to be very significantly expected due to this inventory addition, but some moderation is likely as OEMs take measures to liquidate the previous year’s stock.

ABOUT THE AUTHOR

Alisha Sachdev

Alisha Sachdev is an assistant editor with Mint based in Delhi. She reports on the auto and mobility sector, with a special focus on emerging clean mobility technologies. She also focusses on developing multimedia properties for Mint and currently hosts the 'In A Minute' series and the Mint Primer podcast. Previously, she has worked with CNBC-TV18 and NDTV.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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