Retail Sales Rebound In June, Automakers Build Up Inventory
Automakers are building inventory at dealerships in anticipation of demand.
Retail auto sales recovered in June over the previous month as local lockdowns announced to contain a deadlier second surge of Covid-19 eased.
Vehicle registrations — a measure of sales at dealerships — rose 127% over the preceding month to 12.20 lakh units in June, according to data from 1,493 regional transport offices in 33 states and union territories. BloombergQuint collated the numbers from the website of the Ministry of Road Transport and Highways.
Retail sales also increased over last year when the economy had just started reopening in phases after a nationwide lockdown.
Retail sales had tumbled in May as dealerships shut in cities and rural demand declined as the resurgence in the coronavirus pandemic ravaged India's hinterland.
Registrations of passenger cars and two-wheelers, however, rebounded in June, reflecting demand for the vehicles booked but not delivered. Still, the monthly volumes remained below the peak Covid numbers in November festive season.
As per data available for factory gate and retail registrations, the dealerships
A BloombergQuint analysis of the factory-gate and dealership numbers suggests inventory build-up at the end of June. Most companies shipped a far higher number of units than demand at dealerships.
Bulk of the demand returned from key states like Maharashtra, Gujarat, Tamil Nadu, Uttar Pradesh and Karnataka as cities eased restrictions, registration of vehicles.
Still, passenger vehicle, and two- and three-wheeler sales have yet to breach the pre-Covid monthly levels.
Retail sales for the segment more than doubled over the preceding month and rose nearly 44% over June last year. The passenger car makers tracked by BloombergQuint saw their retail sales jump 53% over June 2020. Many of the carmakers continue to face supply-chain issues and semi-conductor shortage. Inventory levels are higher over a year earlier but below the 2019-20 peak.
While more people bought scooters and motorcycles, demand is below the pre-Covid levels. Dealers kept nominal inventory as working capital remained tight through May-June.
Tractor sales remained resilient, jumping ahead of the sowing season and in anticipation of a normal monsoon. Inventory is high as demand remained robust even during the lockdown.
Commercial vehicles makers have increased production in the last few months, barring May when retail sales slipped due to local lockdowns. Orders for school buses remained below the pre-pandemic level as education institutions operate online. Inventory is thin as dealers prefer to carry minimum stock.