The Indian Auto Retail – How has the Year been for the Industry?
While the prospects for the Indian auto-industry at large looked bleak even pre-pandemic, the past year has been rather hard for this core industry of the nation. Taking a look at the year-end month of December we can see that:
• Two-wheeler inventory remained elevated as sales at dealerships maintained its declining trend over two months.
• Retail sales, as proxied by vehicle registrations, for two-wheelers fell about 20% month-on-month as per the info publicly available on the Vahan portal of the Ministry of Road Transport and Highways.
• Demand, at large, failed to sustain the festive-period bump-up amid rising costs.
Amidst these declining demand trends, auto-makers continued to push stock, which has caused the level of inventory—measured as the difference between retail sales and factory-gate shipments—to remain high, in spite of a sales decline in the months of November and December.
The Case of Two Wheelers:
Average inventory for two-wheelers, as per the Federation of Automobile Dealers Associations, ranged from 30 to 32 days at the end of December. Two-wheeler makers’ business was already on a decline before the pandemic struck as longer-tenure upfront insurance and stricter emission standards increased the cost of ownership.
Then, the pandemic hurt purchasing power. Sales picked up on preference for personal mobility as restrictions eased, but rising fuel costs and price hikes tempered the nascent recovery. Besides, a general trend in consumers highlights preferences towards opting for cheaper, low-range electric scooters.
The Case of Cars:
Carmakers also pushed stock as demand for personal mobility continued to rise and the chip shortage eased in December. Average inventory for passenger vehicles, from the same sources, ranged from 8 to 10 days at the end of 2021.
Passenger vehicles saw muted growth in registrations in December, while tractor sales jumped as sentiment improved ahead of winter crop sowing. Still, total registrations declined 14.2% over the previous month and 16% YoY at 15.65 lakh units.
Overall retail sales stayed below the pre-pandemic level of March 2020. Passenger cars, however, beat pre-COVID levels for the sixth straight month. The month of December is usually seen as a high sales month where OEMs (original equipment makers) continue to offer best discounts to clear the inventory due to change of year. It was, however, not the case this time around as retail sales continued to disappoint, thus wrapping up an underperforming calendar year
Passenger Vehicles
For Passenger Vehicles, retail sales rose for the major players over the previous month in December. However, year-on-year, Maruti Suzuki India Ltd. and Hyundai Motor India Ltd. reported a decline. Tata Motors Ltd. is the only automaker among the top four to see a rise in registrations.
Two-Wheelers
All major two-wheeler makers, barring Royal Enfield, witnessed a decline over the previous month in December. Year-on-year, too, registrations dropped. Retail sales of two-wheeler makers are yet to cross the pre-pandemic level.
Commercial Vehicles
Commercial vehicle makers such as Ashok Leyland Ltd. and VE Commercial Vehicles Ltd. saw a year-on-year rise in retail sales on a lower base. Registrations, however, declined over the previous month for major companies. Retail sales in the quarter ended December, too, rose year-on-year for most.
Electric Vehicles
And lastly, electric vehicle sales exceeded 3 Lakh in 2021 for the first time as fuel cost rose. Sales for battery-powered vehicles crossed 50,000 units in December alone.
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