Pre-buying before OEMs price hikes, lifted Dec vehicle demand: Ind-Ra

Pre-buying of vehicles before OEMs’ price hikes lifted demand in December, said India Ratings and Research (Ind-Ra).

The domestic automobile industry’s growth momentum had continued in December 2020, even after the festive season.

“This was mainly due to the increased demand as customers chose to pre-buy vehicles anticipating price hikes by original equipment manufacturers (OEMs) since January 2021,” the ratings agency said in its ‘Auto Monitor’ report for December.

“Continued consumer preference for personal mobility coupled with the festive season demand had seen the domestic automobile industry’s volumes increase by 11 per cent YoY in 3QFY21 with PV and 2W sales volume up 14 per cent and 13 per cent YoY, respectively.”

Accordingly, continuing to lead the growth trend were sales of PVs and 2Ws which went up 14 per cent and 7 per cent YoY, respectively.

However, CV sales volume fell 1 per cent YoY while 3W continued the downward trend and plummeted 59 per cent YoY during 3QFY21.

“For 9MFY21, the domestic auto industry reported a 24 per cent YoY decline in sales volumes, with PVs, CVs, 3Ws, and 2Ws sales volumes falling 16 per cent, 37 per cent, 74 per cent and 23 per cent YoY, respectively.”

As per the report, retail sales volume also rebounded in December 2020, with PV and 2W retail sales up by 24 per cent and 12 per cent YoY, respectively.

This sales momentum was better than the growth recorded in wholesale sales, and was aided by the festival spill-over demand coupled with the pre-buying.

On the other hand, over April-December 2020, retail sales continued to lag behind the wholesale dispatches by OEMs.

“During 3QFY21, the total retail sales volume declined by 13 per cent YoY compared to the 11 per cent YoY increase in wholesale volumes, suggesting that while consumer sentiments are improving, consumer demand is yet to catch up to the wholesale level despite the festive season tailwind.”