Auto sales see upswing due to low-interest rates and preference for personal mobility

Analysts said that the underlying demand for vehicles remains strong, despite hike in fuel prices and vehicle prices in recent months.
cars lined up in field
cars lined up in field
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As the financial year ended, auto sales saw an upswing when compared to the start of the year. The base effect, along with low-interest rates and preference for personal mobility due to the COVID-19 pandemic, accelerated year-on-year sales momentum of major automobile players. Maruti Suzuki reported a growth of over 99% in its overall sales during March 2021, on a year-on-year basis. The company sold 167,014 units when compared to 83,792 units in March 2020. On a sequential basis, the company sold 164,469 units of vehicles in February 2021.

For the passenger vehicle giant Hyundai Motor India, the overall sales including exports grew by 100% during March, to 64,621 units from 32,279 units sold during March 2020. Similarly, the company's domestic sales rose during the month under review, by 100% to 52,600 units from 26,300 units sold during the corresponding month of the previous year. Exports increased by 101% to 12,021 units from 5,979 units shipped out during March 2020.

Mahindra and Mahindra sold a total of 40,403 units of its vehicles last month both in the domestic and the international markets. On a year-on-year basis, the sales numbers are multiple times higher than the 6,679 units sold in the pandemic-struck March 2020. In the utility vehicles (UV) segment, Mahindra sold 16,643 vehicles in March 2021, compared to 3,111 vehicles in March 2020, the company said in a statement. The passenger vehicles segment (which includes UVs, cars and vans) sold 16,700 vehicles in March 2021.

"At Mahindra, we are witnessing very good momentum in demand and have a strong pipeline of bookings across our SUV range of Bolero, Scorpio, XUV300, All-New Thar and also the Bolero Pik-up," said Veejay Nakra, Chief Executive Officer, Automotive Division, M&M. "In fact Bolero volumes for March have been the highest in this financial year and despite supply constraints, we have been able to ramp up production of Bolero Pik-up significantly during the month." He added that supply challenges are expected to remain for the next two to three months and then ease out gradually.

The company's total passenger vehicle sales during the financial year ended March 31, 2021 was over 1.57 lakh units.

Tata Motors reported a sale of 66,609 units of vehicles in March. The sales were six-fold higher compared to 11,012 units sold in March 2020. The company sold 36,955 commercial vehicles in the domestic market last month, way higher than the 1,601 units sold a year ago, showed a statement. Furthermore, Tata Motors PV business posted its highest ever sales in nine years, on March 21 and Q4FY21. In FY21, the business registered its highest ever annual sales in 8 years, while posting a growth of 69% versus FY20. The PV business overall sales grew by 422% during March to 29,654 units from 5,676 units sold during March 2020.

TVS Motor and Hero MotoCorp

Two-and-three wheeler major, TVS Motor Company registered sales of 322,683 units in March 2021 as against the 144,739 units sold in March 2020.

Additionally, two-wheeler major Hero MotoCorp sold 576,957 units of motorcycles and scooters in March 2021, registering a growth of 72% over the corresponding month in the previous year. The company had sold 334,647 units in March 2020.

"Despite a very high year-on-year growth, which is a function of an extremely low base, passenger car segment volumes should be seen in terms of having achieved record monthly sales in March, a level last exceeded in March 2017," said Sridhar V, Partner, Grant Thornton Bharat LLP. "Apart from expectations of offtake at the dealers end due to continuing demand, year end discounts and new introductions have also contributed to this situation."

Ashish Modani, Vice President, ICRA, said: "Easing discounts level and high waiting period across PV OEMs suggests that underlying demand remains strong, despite hike in fuel prices and vehicle prices in recent months."

"Domestic M&HCV demand also seems to be bottomed out, with the top two players reporting healthy volume during Mar-2021. Lockdown restrictions during March 2020 impacted volume, and hence volume growth on year-on-year looks exceptionally strong because of low base effect. The volume growth percentage will continue to look good in the coming months, because of the low base effect of last fiscal when industry volume almost came to a standstill post nationwide lockdown during Mar-2020 to May-2020," he further said.

Suman Chowdhury, Chief Analytical Officer, Acuité's Ratings and Research, said: "The overall PV volumes for the top 11 companies recorded a very sharp growth of around 125% on a year-on-year basis but the growth print is relatively moderate at 4% on a sequential basis (month on month)."

"We believe that the consumer sentiments in the PV segment remain positive due to preference for personal mobility, a significant number of new and competitively priced product launches particularly in the Compact SUV segment and lately, the introduction of the scrappage policy which will facilitate an easier replacement of old vehicles."

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