Auto sales rebound in August after nine months due to pent-up demand

Companies and dealers are building up stocks ahead of the festive season that many Indians consider auspicious for purchase of consumer durĀ­ables
Wholesale numbers of cars and utility vehicles rebounded in August due to pent-up demand. Domestic wholesales of passenger vehicles increased 14.16 per cent year on year (YoY) to 215,916 units last month, according to the data released by the Society of Indian Auto­mobile Manufacturers (Siam). 

The passenger vehicle sales have returned to positive territory in August after nine consecutive months of decline.

While monthly factory-gate car shipments rose 14.13 per cent YoY to 124,715 units in August, sales of utility vehicles jumped 15.54 per cent to 81,842 units — the second straight month of uptick.

Automobile sales in India are counted as factory dispatches and not retail sales. Two-wheeler sales increased by 3 per cent to 1,559,665 units, while passenger cars grew 14 per cent YoY to 124,715 units.

Companies and dealers are building up stocks ahead of the festive season that many Indians consider auspicious for purchase of consumer dur­ables. 

The growth in August dispatches comes as a result of low base in the corresponding period when automakers witnessed contraction in consumer demand as a consequence of the economic slowdown and increase in vehicle prices due to change in emission and safety norms.

“We are beginning to observe growth, which is instilling confidence back into the industry, especially in the two-wheeler and the passenger vehicle segments. Even though the industry witnessed YoY growth in August, it is to be recognised that the base figures in the year-ago month was very low, as industry had shown a decline of about 32 per cent for passenger vehicles and 22 per cent for two-wheelers,” said Kenichi Ayukawa, president, Siam.

Maruti Suzuki reported a 21.7 per cent YoY growth in domestic wholesale to 115,325 units in August. Hyundai Motor India, country’s second largest passenger vehicle manufacturer, also witnessed a 19 per cent YoY rise in domestic wholesale to 45,809 units.

Vehicle manufacturers increased inventory amid expectation that retail sales would pick up during festivals in October-December period. Dispatches of utility vehicles grew 15.54 per cent YoY to 81,842 units as companies, such as Maruti Suzuki India, Hyundai Motor India, and Kia Motors India, increased wholesales of their respective sport utility vehicles to meet rising demand.

“Growth of 14 per cent in passenger vehicles and 3 per cent in two-wheelers in August 2020 indicates trends of recovery for the industry, though it is against the backdrop of pent-up demand and the beginning of festive season,” Ayukawa said.

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