The Business Bytes
TBB BUREAU
NEW DELHI, JANUARY 11, 2021
Vehicle registrations in December 2020 registered an 11 per cent growth on a year-on-year (YoY) basis, the first positive growth in a month in the current financial year, largely due to festival spill over demand and pre-buying due to announcement of price hike in January ’21.
Data released by the Federation of Automobile Dealers Associations (FADA) on Monday showed that over 18.44 lakh vehicles were registered in December 2020, compared to over 16.61 lakh units in the year-ago period.
Registration of two-wheelers, personal vehicles, and tractor categories rose by 11.8 per cent, 24 per cent, and 35.5 per cent (YoY) respectively, while that of commercial vehicles and three-wheelers continued to decline by 13.5 per cent and 52.7 per cent respectively as compared to the corresponding period in 2019.
As per the data, dealer inventory continues to fall with personal vehicles’ inventory ranging from 15-20 days and two-wheelers’ inventory from 30-35 days.
Personal vehicle dealers continued to face supply-side issues for the second straight month, leading to higher waiting period that went as far as eight months.
Commenting on the December 2020 registration data, FADA President Vinkesh Gulati said, “A good crop season, better offers in 2W segment, new launches both in PV as well as 2W and a fear of price increase in January 2021 kept the demand going.”
“Supply-side issues in passenger vehicles continued for the 2nd straight month, thus making the waiting period stretch to as long as 8 months in select OEM vehicles,” he said.
Gulati further said that the commercial vehicle segment continues to see demand pressure even though on a YoY basis the segment fell by 13.5 per cent due to lower base.
“Increased intra-city goods movement continued to help small commercial vehicles outperform medium and heavy commercial vehicles segments as Axle-load norms, increased fuel and vehicle cost and higher freight rates continued to play the spoilsport,” he said, adding that tractors continue to outshine the supply for six straight months, further confirming the fact that the rural economy carries on to lead India’s economic recovery.
On the near term outlook, FADA said demand for vehicles in January looks to be bleak. Personal vehicle segment may witness growth if demand supply mismatch is resolved. With recent hikes announced by all OEMs, FADA expects a temporary blip in demand as customers will take time to absorb the same.
With gradual opening up of educational institutes/colleges, organic demand for 2-wheelers should slowly start coming back, it hoped.
The government’s approval for Rs. 12,000 crore infrastructure projects will see its positive effects in the commercial vehicles space, though full recovery is only expected in all the segments of the industry from April ’21 onwards.
With no further price hike shocks, demand spurring budget by the Central Government, Covid vaccine’s effectiveness to fight the current and the new strain of virus with no/minimal side effects, FADA remains guarded in its optimism for auto sales during last quarter of this fiscal year.
