Auto Sales In November 2022: Demand Cools After Festive Season Spike, Say Analysts
Analysts said the demand for utility vehicles remained strong, with bookings still coming in at a rapid pace.
India's auto sales in November are expected to slow down compared to the previous month due to de-stocking at dealerships and demand moderation following the festive season.
However, the dispatches could be higher year-on-year, as sales were impacted by the shortage of semiconductors last year despite it being a festive month.
Weak demand in the entry-level car segment, slowdown in the rural market, and the persistence of a chip shortage limited the overall wholesale sales during the month, according to research reports from Dolat Capital Market Pvt., Nomura Financial Advisory, Securities India Pvt., and Motilal Oswal Financial Services Ltd.
Analysts said the demand for utility vehicles remained strong, with bookings still coming in at a rapid pace, but the challenges of chip shortage and weakness in the entry-level segment persist.
According to Nomura, the waiting period has come down for SUVs, and automakers may have to reduce production or raise discounts in the small car segment.
“We see early signs of demand moderation,” it said. "Thus, we expect industry growth to slow down substantially from nearly 25% in FY23 to 6% in the next financial year," the brokerage said in a report.
In the two-wheeler segment, analysts witnessed a continuation of strong performance by scooters, while motorcycles languished due to muted demand in rural areas.
The volume estimates suggest the two-wheeler companies will clock higher year-on-year sales, with the exception of Bajaj Auto Ltd., which relies heavily on exports.
The sales of commercial vehicles seem to be affected by the rise in borrowing rates, analysts said. Fleet utilisation reduced and demand moderated in November, they said.
“In CV, although current demand was driven by strong replacement demand, expect to see some moderation in growth in FY24 due to the ripple effect of high interest rates in many sectors and the implementation of BS6 Phase 2,” Dolat Capital said in a report.
The sales momentum for tractors is expected to have improved in November, with strong rainfall helping the companies liquidate inventory.