December 2022 Auto Sales: Growth Slows Down As Year Ends, Say Analysts
Having shown a positive momentum in the last three months, the two-wheeler category slowed down again.
India’s auto sales lost momentum in December as the recovery in two-wheelers lost steam after the festive bump and chip shortages limited production of passenger vehicles.
Analysts said the positive momentum observed in the two-wheeler category in the last two to three months has slowed down again, while weak demand for entry-level cars limited the sales of passenger vehicles along with the limited supply of semiconductors.
The two-wheeler demand has slowed down to pre-festive levels with no recovery in sight, and waiting periods for passenger vehicles have started to come down, Nomura Financial Advisory said in a report.
However, two-wheeler demand could improve in 2023 with lower inflation, a better crop harvest, and higher government spending, it said.
The brokerage expects passenger vehicle industry growth to slow down to 6% in FY24 from nearly 25% estimated in FY23.
"While the rural sentiments are turning positive, it is not yet benefiting two-wheeler demand, especially in the lower-end segment," Motilal Oswal said in a report.
In the commercial vehicle category, analysts said the demand sentiments and improved fleet utilisation aided sales, despite a moderation in freight rates post-festivals.
Nomura, however, said the volume growth of medium and heavy commercial vehicles is expected to slow down to 10% in the next financial year from nearly 42% in the current fiscal due to a slowing economy and industrial growth.
While the contribution of small-fleet operators has picked up in the overall demand for commercial vehicles, the industry is yet to see a broad recovery, which gets reflected in the new fleet additions, Motilal Oswal said.
Tractor sales are expected to grow 6-8% year-on-year in the month as sentiments across regions remain positive, led by healthy reservoir levels, better crop yields, and favourable financing, analysts said.
However, these benefits do not fully reflect themselves in December 2022 wholesale due to a lower scope of inventory push across companies and the beginning of the inauspicious season of Kharmas, Motilal Oswal said in its note.