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Credit rating agency ICRA said in its monthly auto sales commentary that in the passenger vehicles segment, utility vehicles (UVs) will continue to outperform the industry growth in the medium term.
In the commercial vehicles (CV) segment, the demand sentiment is yet to improve materially, whereas for two-wheelers, ICRA expects some pre-buying in the forthcoming months, at least from the price-sensitive segments,.
"Domestic UV wholesale dispatches grew by 32.7 per cent during Nov-2019, as compared to 10.8 per cent decline in passenger car segment. Several new launches in compact UV segment, especially Hyundai Venue and Kia Seltos, were the key driver for the wholesale volume growth,” said Ashish Modani, Vice President, Corporate Sector ratings, ICRA Ltd.
That the UV segment will continue to outperform the industry growth in the medium term is in line with the global trend, added Modani.
In CVs, with the dealer inventory being as high as 40-45 days, OEMs continue to focus on rationalising dealer stock levels, said Shamsher Dewan, Vice President, Corporate Sector ratings, ICRA Ltd. “Despite high discount levels, demand sentiment is yet to improve materially, given weak macroeconomic sentiment, viability pressures on fleet operators, and tight financing environment,” he said.
As for two-wheelers, ICRA continues to maintain its expectation of 8-10 per cent volume de-growth in FY2020 for the domestic two-wheeler industry. “As weak demand sentiments persist and BS-VI transition looms closer, the OEMs are in the process of systematically reducing their BS-IV channel inventory to ensure a smooth transition. Given the significant price differential of BS-VI compliant models with their BS-IV counterparts, some pre-buying, at least from the price-sensitive segments, is expected in the forthcoming months,” said Dewan.
Passenger vehicle sales declined by 17.98 per cent in April-November 2019 over the same period last year. The overall CV segment registered a decline of 22.12 per cent in April-November 2019 as compared to the same period last year. Three-wheeler sales declined by 4.97 per cent in April-November 2019 over the same period last year. Two-wheeler sales registered a de-growth of 15.74 per cent in April-November 2019 over April-November 2018.
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