Auto cos report healthy sales on low base, pent-up demand

Base effect along with a slight rebound in domestic demand led major automobile players to report healthy sales numbers for August.

Other factors such as healthy monsoon, pent up demand and preference for personal mobility over public transport during the pandemic has aided in the upswing, said analysts.

Automobile major Maruti Suzuki’s total sales during August 2020 rose 17.1 per cent on a year-on-year basis.

The company’s total off-take increased to 124,624 units from 106,413 units sold during August 2019.

“This is a growth of 15.3 per cent over July 2020 and 17.1 per cent over August 2019,” the company said. The total sales include 115,325 units off-take in the domestic market and 1,379 units to other OEMs.

“In addition, the company exported 7,920 units in August 2020, a drop of 15.3 per cent over August 2019,” the statement said.

Similarly, Hyundai Motor India’s August domestic sales rose by 19.9 per cent.

The auto major’s total domestic off-take increased to 45,809 units from 38,205 units sold during the corresponding month of last year.

However, the auto major’s exports fell to 6,800 units during the month under review from 17,800 units from August 2019.

Consequently, cumulative sales declined to 52,609 units from 56,005 units sold during the like month of last year.

“We would like to carry on with cautious optimism as uncertainty still surrounds the pandemic,” Tarun Garg, Director (Sales, Marketing & Service), Hyundai Motor India said in a statement.

Other auto makers saw the decline in overall sales narrow-down on a YoY basis.

Mahindra and Mahindra (M&M) reported a fall of 16 per cent in its total sales during August, on a year-on-year basis.

The company sold 30,426 units, including exports, last month, compared to 36 ,085 vehicles sold during the same period last year.

It reported a fall of 13 per cent in domestic sales last month to 29,257 units from an off-take of 33,564 units in August 2019.

Commenting on the performance, Veejay Nakra, Chief Executive Officer, Automotive Division, M&M said: “At Mahindra, we continue to see good recovery in demand both for SUVs and Pick-ups in the Small Commercial Vehicles segment.”

“For the month of August, we have registered growth in both SUVs and Pick-ups. We have been able to meet the uplift in demand by managing the supply chain challenges and going forward will continue to keep our focus on it.”

Premium automobile manufacturer Toyota Kirloskar Motor’s sales rose to 5,555 units in August 2020, thereby exceeding sales volumes as sold in Jul y 2020.

The company had clocked 5,386 units in the month of July 2020.

It had sold a total of 10,701 units in the domestic market in August 2019 and had exported 843 units of the Etios as well.

Another premium car manufacturer Honda Cars India registered monthly domestic sales of 7,509 units in August 2020. The total number of domestic sales in August 2019 stood at 8,291 units.

Two- and three-wheeler manufacturer TVS Motor Company registered a sales gro th of 14 per cent in August 2020 with 287,398 units as against 252,744 units in July 2020.

It had registered sales of 287,398 units in August 2020 as against 290,455 units registered in the month of August 2019.

In terms of two-wheeler segment, Hero MotoCorp reported a rise of 7.55 per cent in its total sales including exports for the month of August.

The company sold 584,456 units of motorcycles and scooters in August 2020 from an off-take of 543,406 units in the corresponding period of last year.

The two-wheeler major’s total domestic off-take increased to 568,674 units from 524,003 units sold during the corresponding month of last year.

However, the company’s exports fell to 15,782 units during the month under review from 19,403 units from August 2019.

On its part, Suzuki Motorcycle India made a substantial comeback in the month of August 2020 by recording a sale of 57,909 units.

It registered a sequential growth of more than 46 per cent in August sales as compared to July 2020 due to enhanced production levels.

“In line with expectation, the sales momentum in the two wheeler segment continued to improve in August 2020 both on a sequential and YoY basis. Recovery in the 2W segment is driven by healthy offtake from rural markets, ramp-up by OEMs to improve channel inventory and increasing preference for personnel mobility,” said Shamsher Dewan, VP & Sector Head – Corporate Ratings, ICRA.

“ICRA expects the recovery trend to continue in a gradual manner. However, rising instances of disease outbreak outside the metros and supply chain disruptions remain key monitorables.”

According to Sridhar V, Partner, Grant Thornton Bharat LLP said: ” The passenger vehicle sales are experiencing an upward momentum if one were to go by the numbers OEMs have reported for August 2020. Even if it were to be seen over a low base of the previous year indications are that the festival season could turn out to be a positive one for the sector on the back of good monsoon and new introductions and a pent up demand.”

“It may still not be time to cheer considering the contraction economy has reported.”

In addition, Suman Chowdhury, Chief Analytical Officer at Acuite Ratings and Research said the despatch volumes of two bellwether companies in the Indian automobile sector – Maruti Suzuki and Hero MotoCorp reflect a revival in consumer demand which can go a long way in improving the overall demand environment.

“Although the lower base in the previous year has been a factor in the growth numbers, such data is surely encouraging in the context of the significant contraction in Q1 GDP,” Chowdhury said.