Passenger vehicle sales may stage quick return to growth

NEW DELHI: Passenger vehicle sales might stage a quick recovery once the second wave of the Covid abates as more consumers choose personal vehicles over public transport and pent-up demand boost sales, analysts and industry executives said.

In addition, most automakers, suppliers and dealers have adapted to using digital platforms and other methods to continue production and reach customers despite disruptions, and are unlikely to face the same hurdles they did during the first wave of the pandemic, they said.

Two-wheelers, on the other hand, might face a prolonged slowdown this time as demand had already reduced before the second wave hit because of the increase in vehicle prices.

While the second wave is a matter of great concern for the industry, the learnings from last year have been that automakers don’t need to make plans for a six-to-nine-month period and should see it month by month, said Tarun Garg, executive director, Hyundai Motor India.“If we had gone by the assessment of auto sales post covid from experts, we would not have been at this level and would have cut production and resources. We were optimistic, and that is important. I think customer demand should continue,” said Garg. Demand should be higher in the second half of this year with the onset of the festival season in August, and demand and supply of vehicles are expected to improve, he said. In early FY21, the Society of Indian Automobile Manufacturers expected sales of vehicles across segments to decline 25-45% because of lockdown measures. The automobile industry, especially passenger vehicle and two-wheeler makers, made a stellar comeback in the second half of FY21 as sales surged because of a better-thanexpected economic recovery and a shift in customer preference towards personal mobility.

Manufacturers such as Maruti Suzuki India Ltd, Hyundai Motor India Ltd and Hero MotoCorp Ltd increased production to record levels in October, expecting sales to rebound during Diwali and Dhanteras. After two years, automakers reported a double-digit increase in sales during Navratri and Diwali.

A preference for personal mobility continues to drive the demand for passenger cars, said Shaukat Ali, assistant vice-president, research, Monarch Networth Capital. Many consumers are treating vehicle purchases as key to avoid infections.

“In the coming years, we will see a further shortening of the life-cycle of cars. These factors will continue to keep the car demand intact in the coming quarters,” he said.