Retail sales of vehicles pick up speed in June | Economic Times

Mumbai: Retail sales of vehicles far outnumbered dispatches from factories to dealerships last month, suggesting a recovery in the market while also highlighting the supply constraints faced by manufacturers.Industry data suggests retail sales of passenger vehicles at 170,000 units in June, about 50,000 more than the estimated 116,000 cars and UVs that left factory gates. Some 1.2 million two-wheelers were delivered to customers in the past month against 1 million dispatches.Sales were down about 25% from a year earlier in June for passenger vehicle makers, after a wash-out in April when the country was in lockdown and weak sales in May when the government started easing curbs.While the June numbers suggest improving sentiment, pent-up demand from the lockdown period is also coming to the market, said industry executives. They cautioned the demand trend depends on which way the Covid-19 situation would turn. 76805459Production Issues Due to CovidIn normal circumstances, wholesale numbers closely follow retails, but these are unprecedented times and the wholesales are reflecting the supply rather than demand, Maruti Suzuki executive director for sales and marketing Shashank Srivastava said.“A better indicator of customer demand is the parameter of enquiries, bookings and retails, and here the bounce-back is stronger than expected,” he said. The demand as reflected in these variables is around 80-85% of pre-Covid levels, he added.He said developments on the pandemic would have an impact on the market. “There may be a vaccine upside that will create favourable tailwinds or a virus downside that can lead to severe headwinds.”Gaurav Vangaal, the IHS Markit associate director who specialises in production forecasting, said automakers were facing issues on production lines to ramp up output, as they need to comply with social-distancing regulations and limit the number of workers at factories as per Covid-19 protocols.Vangaal said several automakers had still revised their production estimates for July after receiving positive signs from rural markets and non-metro cities that are less affected by the pandemic.VEHICLE REGISTRATIONSThe average daily passenger vehicle registrations rose to 44,273 in June from 9,014 the previous month, according to data compiled by ICICI Securities from the government’s Vahan portal. The numbers are seen as a direct proxy to retail sales. The portal, however, doesn’t capture data from Andhra Pradesh, Telangana and Madhya Pradesh, which account for around 15% of the country’s volume.Between June 29 and July 2, daily vehicle registrations reached 57% of the pre-Covid level, as per this data.Hero MotoCorp, the two-wheeler market leader, said it was witnessing a clear uptick in customer sentiment, with a good conversion of enquiries into purchase for all products. “We have been seeing robust retail demand and the numbers are improving week-on-week. So, we are definitely seeing a positive trend of retails chasing production,” said a spokesperson.However, the rising number of Covid cases does offer an uncertain view on the future.Bajaj Auto executive director Rakesh Sharma cautioned that demand was unfolding quite well but localised surges in Covid cases interrupted the resumption both at the supply chain and the dealer end.“The trajectory for sales is pointing upwards but we will need to be prepared to respond to a scenario of three steps forward and one backward for quite a long period,” he said.