Q1 auto sales fall miserably, but see silver lining in June

Two-wheeler sales take the lead

MUMBAI: The domestic automobile industry witnessed a 75 per cent year-on-year (yoy) decline in sales volume in first quarter (Q1) FY21.

However, the sales volume increased 258 per cent month-on-month (mom) in June 2020, led by the pent-up demand and demand for personal mobility to maintain social distancing, with the easing of lockdown restrictions, while public transportation is only partly operational.

Two-wheelers (2Ws) have demonstrated signs of a faster recovery than other industry sub-segments, as forecasted by India Ratings & Research (Ind-Ra), on account of a continuous demand from the rural segment as well as two-wheelers being the most-affordable vehicle, favouring personal mobility.

During Q1, FY21, 2-wheeler domestic sales dropped 74 per cent yoy, passenger vehicle (PV) sales dipped by 78 per cent and commercial vehicle (CV) sales fell by 85 per cent.

In June 2020, domestic automobile sales volume (excluding CV) declined 41 per cent yoy, with PV and 2-wheeler sales falling 50 per cent and 39 per cent yoy, respectively.

It is a sharp improvement from April and May 2020 when the total sales volumes had plunged 100 per cent and 85 per cent yoy, respectively, amid the COVID-19 related lockdown.

Ind-Ra said it expects improving rural sentiments and continued preference for personal mobility over public transport or shared mobility to remain the key growth drivers in the near term.
In the 2-wheeler segment, motorcycle sales volume declined 35 per cent yoy compared with a 47 per cent yoy drop in scooter volumes in June 2020 (Q1 FY20: motorcycles down by 73 per cent, scooters down by 76 per cent).

Motorcycles accounted for around 69 per cent of the total 2-wheeler sales in June 2020 (66 per cent in June 19).

Motorcycles outperformed scooters sales in June 2020 due to higher demand from rural markets and tier 2, 3 cities. Ind-Ra expects this trend to continue in the near term, as around 50 per cent of the motorcycle demand comes from the rural markets.

 

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