Auto Sales In August 2022: Pre-Festive Build-Up To Drive Dispatches

India's auto sales rose in August across segments, barring tractors, as companies ramped up dispatches to dealerships ahead of the festival season.

Factory-gate shipments of carmakers rose over last year as improved availability of chips led to higher production, according to research reports compiled by Emkay Global Financial Services Ltd., Motilal Oswal Financial Services Ltd. and Dolat Capital Market Pvt.

However, month-on-month production is likely to fall due to fewer working days, Dolat Capital said in the report.

According to analysts, rising gas prices affected sales of CNG-powered vehicles but that would be offset by strong pent-up demand for cars.

The dispatches of two-wheelers are expected to improve owing to festive demand and inventory build-up with dealers, the reports said. July and August are typically weak months for two-wheeler sales, it said.

“However, an improvement was expected in August 2022, given the mini-festivals in some parts of India, though Ganesh festival related demand is yet to come (starts Aug. 31),” Motilal Oswal said in a report. “Though this has not panned out well, dealers expect retails to pick up during the festival season,” the brokerage said.

The robust growth seen in the commercial vehicle category is likely to continue in August, led by replacement demand from fleet operators, the report said. Sequentially, the sales may fall as August is a seasonally weak month for such vehicles, it said.

Motilal Oswal said Ashok Leyland Ltd. is gaining market share in the medium and heavy commercial vehicle category due to aggressive pricing and improvement in demand for higher tonnage vehicles.

High tractor inventory with dealers may lead to a sharp fall in volumes as deficient rainfall in certain states reduced kharif sowing, which affected farmer sentiment, the brokerage said.