Wholesale dispatches improve in March thanks to a rebound in economic activity
The shift in customer preference towards personal mobility to avoid covid aided PV sales
Wholesale dispatches of cars, utility and commercial vehicles continued to improve in March, compared to February, on the back of sustained improvement in economic activity and shift in customer preference towards personal mobility to avoid covid-19 infection.
Increased activity in the infrastructure and manufacturing sectors also helped improve wholesales of heavy and medium commercial vehicles. However, dispatches of two-wheelers were muted following the resumption of public transport in rural areas.
Market leader Maruti Suzuki India Ltd reported 0.9% month-on-month (m-o-m) growth in wholesales to 146,203 units in March. Hatchback and compact car sales grew by 2.27% m-o-m to 106,854 units, while utility vehicle sales fell by 2.2% to 26,174 units.
Vehicle dispatches of the country’s second largest auto manufacturer, Hyundai Motor India Ltd, rose by 1.93% to 52,600 units in the month on the back of high demand for its hatchbacks and sport utility vehicles.
Mumbai-based Tata Motors posted 8.9% wholesales growth to 29,654 units, while Mahindra and Mahindra’s dispatches increased by 8.5% to 16,700 units.
Most of the leading automakers replenished inventory at dealerships after improved retail sales over the past five months. Longer waiting period on popular products due to supply chain constraints has also led to a substantial reduction in vehicle stocks. Factory dispatches are considered as automobile sales in India, and not retail sales.
Vehicle sales are usually compared on a year-on-year basis, but in the second half of March 2020, automakers had to close down factories after the Centre imposed a lockdown. Subsequently, operations remained suspended till the first week of May. It took automakers another two months to restart the normal production schedule.
According to Shailesh Chandra, president, PV business unit of Tata Motors, the PV industry witnessed strong growth in Q4FY21 on a low base with robust demand for personal mobility and new launches driving demand. “Tata Motors’ PV business posted its highest ever sales in nine years in March 2021 and Q4FY21. In FY21, the business registered its highest ever annual sales in eight years, while posting growth of 69% vs FY20," he added.
On the back of a faster recovery in economic activity, wholesales of commercial vehicles continue to show signs of a pick-up, albeit on a low base, after a gap of more than two years. Dispatches of commercial vehicles at Tata Motors increased by 18.2% to 36,955 units, while Ashok Leyland’s sales increased by 23.3% to 15,761 units.
Hero Moto Corp., India’s largest two-wheeler manufacturer, witnessed 12.3% growth to 54,4340 units, while Chennai-based TVS Motor Co. reported a 3.5% jump in volumes. With the resumption of public transport, sales of entry-level motorcycles have softened over the past three months in rural and semi-urban markets.
Mitul Shah, head, research, Reliance Securities, said growth was very high compared to the year ago due to a low base. Therefore, it is more appropriate to consider m-o-m growth for analysis. “PVs and tractors recorded decent volume, while M&HCV outperformed strongly with healthy m-o-m growth. Overall volume was also supported by inventory fill up by dealers ahead of expected price hike. We are positive on commercial vehicle segment and expect M&HCV segment to record over 100% growth in FY22E," Shah said.