Automotive manufacturers started opening up their manufacturing plants post the lockdown in India in the month of May 2020. Ever since, there has been a month on month improvement in factory dispatches cross vehicle categories, with September 2020 being the best month yet. The faster than expected Auto recovery has pleasantly surprised everyone, but the upcoming festive season will be critical in determining sustainability of the same.
Majority of OEMs in September have witnessed a year on year growth in dispatch volumes relative to September 2019.
The 4W category leader, Maruti has grown the fastest with a 34% change in domestic passenger car volumes at 147,912 versus 110,454 in the same period last year. On observing the split between sub-categories, the entry level vehicles like Alto and S-Presso grew at an even faster 44.3% rate. Second placed Hyundai, registered a 24% growth in dispatch numbers relative to last year, mainly on account of demand for newer models like the All New Creta. Other major OEMs also witnessed growth in volumes on both month on month and year on year basis, with the exception of Toyota, which de-grew on a year on year basis.
Most major 2W players also showed growth in volumes in the month of September 2020. Bajaj Auto grew domestic sales at 24% and exports at 16% on a year on year basis to reach 185,351 exported units, its highest on record till date. The market leader, Hero MotoCorp also crossed the 7 lakh unit dispatch number for the first time in 2020.
Commercial vehicle sales have lagged in the recovery graphs with LCVs performing better than M&HCV, mainly on account of robust demand from e-commerce and FMCG. LCV demand for both Ashok Leyland and Mahindra expanded in September 2020 by 20% and 3% respectively.
The 3W sub-category is struggling the maximum and this shows up in Bajaj Auto and Mahindra’s CV sales figures, which saw a 76% and 92% decrease respectively from the same time last year.
Petrol and Diesel demand corroborates the above data with petrol consumption increasing (for the first time since February) in September 2020 to 2,450 MT from 2,372 MT in September 2019. However, Diesel consumption fell on a year on year basis by 6% to 5,489 MT in September 2020.
First half of 2020 has been challenging for the entire auto ecosystem, however factory dispatches from OEMs have been increasing monthly in the build-up to the festive season. At the dealership level, there appears to be an increase in inventory levels with 45+ days for 2Ws and 35+ days for 4W dealers. Retail sales data for September 2020 from the Government Vahan vehicle registration dashboard paints a mixed picture, with a pick-up in passenger vehicle sales led by entry level vehicles (9.8% growth year on year), but a fall in 2W and CV sales.
The next few months will be extremely important for the Auto industry with hopes pinned on consumer demand as a result of major festivals like Navratri, Durga Puja and Diwali.