Key Highlights:
- A majority of vehicle manufacturers ended 2020 on a positive note, registering good wholesales growth, and entering the New Year with cautious optimism driven by expectations of a V-shaped economic recovery.
- Commercial vehicles segment delivered in-line volumes for the last month of 2020. Tata Motors (CV) and Ashok Leyland also saw strong double-digit growth M-o-M on the back of higher demand in infrastructure including road construction, mining and e-commerce.
- Tractor makers continued to see strong demand momentum, with both Escorts and M&M delivering better than expected volumes for December, at 7,733 units and 22,417 units, respectively, in anticipation of sustained demand on the back of higher Rabi acreage, GoI support in Kharif procurement and rural development schemes.
Maruti Suzuki India Limited (MSIL) dispatched more than 1.4 lakh passenger vehicles (PVs) to dealers in Dec ’20, up 14.6% y-o-y. In addition, sales of the company’s light commercial vehicle Super Carry more than tripled to 5,726 units, while exports rose 31.4% to 9,938 units.
Hyundai Motor India Limited (HMIL), has posted its highest-ever sales for the Dec month at 47,400 units, up 25% y-o-y. The company achieved the milestone of highest production in a single month at 71,178 units last month and positively anticipating green shoots of recovery in 2021.
Tata Motors’ domestic PV sales jumped to 84% y-o-y at 23,545 units. In Q3 FY21, PV segment registered 89% y-o-y growth against Q3 FY20 – the highest-ever sales in the last 33 quarters. In the commercial vehicle (CV) segment, the company reported 5% y-o-y decline in sales at 29,885 units in Dec ’20. Meanwhile, the retails sales in December were 18% higher than wholesales owing to pent up demand, strong festive season and shift towards personal mobility.
Mahindra & Mahindra Limited (M&M) witnessed 3% y-o-y growth in PV sales at 16,182 units. The company’s overall sales have been affected due to the continuing supply chain challenges specifically the supply shortage of semiconductors. In CV segment, M&M sold 16,795 vehicles in India, down 21.5% y-o-y. Whereas, for M&M farm segment, wholesales continued to be fueled by the restoration of channel inventory post festivals, the announcement of hike in tractor prices, the anticipation of sustained demand on the back of higher rabi acreage, Government’s support in kharif procurement and rural development schemes.
Ashok Leyland Limited, has reported total sales at 12,762 units in Dec ’20, up 14% y-o-y against 11,168 units in Dec ’19. Sequentially, the company’s total auto sales advanced nearly 20% at 10,659 units sold last month while the domestic sales stood at 11,857 units in Dec ’20, registering 14% y-o-y increase.
Honda Cars India Limited (HCIL), has reported 3% y-o-y growth in domestic sales at 8,638 units in Dec ’20 against 8,412 units in the same period last year.
Toyota Kirloskar Motor (TKM) reported 14% y-o-y growth in its domestic sales to 7,487 units in Dec ’20 compared to 6,544 units in Dec ’19.
Hero MotoCorp posted 5% y-o-y domestic sales growth at 4, 27,000 lakh vehicles. The December volumes indicated the continuously improving consumer sentiment while the company clocked its best-ever third quarter sales, with nearly 20% growth last month compared to Dec ’19.
Will auto demand sustain in 2021?
India’s auto industry is at the start of the next upcycle, and given operating leverage gains, cost cutting and lower discounts, earnings growth might be ahead of volume growth.
The following factors will impact the auto market:
- Replacement demand alone can drive 2021 growth.
- Supportive financing environment
- $10 billion incentive under the production-linked incentive scheme.
- New model launches across companies to support 2021 demand.
Apart from the recuperating measures that the automotive industry is taking to revive itself back to its phase of growth, it also demands government reforms. Production-Linked Incentive (PLI) scheme and a well-directed scrappage policy could help provide impetus to accelerate commercial vehicle sales. In conclusion, the automotive industry, by working in unison with the government policies, can create for it a growth path.
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