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File photo - Cars are seen parked at Maruti Suzuki's plant at Manesar, Haryana. (REUTERS)
File photo - Cars are seen parked at Maruti Suzuki's plant at Manesar, Haryana. (REUTERS)

Non-commercial vehicles' output falls 21% m-o-m in Apr: Report

  • Total vehicle production, excluding commercial vehicles, declined by 21% month-on-month in April.

Total vehicle production, excluding commercial vehicles, declined by 21 per cent month-on-month in April, due to an 11 per cent fall in manufacturing of passenger vehicles (PVs) and a 23 per cent drop in two-wheelers during the previous month, owing to the second wave of the pandemic, a report said on Tuesday.

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Besides, the three-wheelers' production fell a massive 86 per cent in April over March, amid lower demand in the domestic market, India Ratings (Ind-Ra) said in the report.

The ratings agency said it believes that the second wave of COVID-19 has interrupted the momentum recorded by the industry in the third and fourth quarters of 2020-21. Many original equipment manufacturers (OEMs) also advanced maintenance shutdowns to April and May on account of dampening consumer sentiments, closure of automotive dealerships, as well as supply-side constraints, noted the report.

It is likely to have an adverse impact on demand across rural and urban regions. However, the expectations of strong macroeconomic growth, albeit on a lower base in FY21 along with an average monsoon expectation and a good rabi harvest, may assist demand for the sector in 2021-22, the report added.

On the volume side, the domestic automobile industry's sales volume (excluding commercial vehicles) declined 30 per cent m-o-m in April, it said.

The agency added that the y-o-y numbers are not comparable due to the nationwide lockdown in April 2020.

The decline in domestic sales volume was mainly on account of the increasing number of coronavirus infection cases, resulting in state-wise lockdowns coming into effect during the latter part of the month.

PV and two-wheeler sales volumes fell 10 per cent and 34 per cent m-o-m, respectively, in April; while the three-wheeler sales volumes declined 57 per cent amid a further reduction in preference for shared mobility, Ind-Ra said.

Nevertheless, exports volumes continued the growth trend in April, which saw a 19 per cent growth over March, mainly led by 21 per cent m-o-m growth in two-wheeler exports, as per the report.

It said the PV demand remained resilient in April benefitting from the increased consumer preference for personal mobility. The domestic PV market continues to see an increasing shift towards utility vehicles (UVs), which accounted for 42 per cent of domestic PV sales as against 30 per cent in April 2019, it added.

While volumes in the UV segment declined 11 per cent m-o-m, which was an increase of 47 per cent as compared with April 2019; passenger car sales volume also declined 10 per cent m-o-m and by 12 per cent from April 2019, owning to a 14 per cent m-o-m fall in the sales volume of compact cars, the report said.

According to Ind-Ra, motorcycle and scooter sales fell 34 per cent and 33 per cent m-o-m in April over March 2021. The two-wheelers segment is price sensitive and, hence, is impacted more by the increased cost of ownership amid price hikes by OEMs and high fuel prices in India.

This is apparent in the 36 per cent m-o-m decline in the sales volume of the more price-sensitive entry-level motorcycles under the 125cc capacity vehicles. Demand has also been adversely affected due to schools and colleges remaining closed, which typically restart during the April quarter, it stated.

Two-wheeler volumes were also impacted by maintenance shutdowns undertaken by the largest two-wheeler major Hero in a phased manner from April 22, Ind-Ra said.

According to the ratings agency, retail sales also declined in April 2021, with passenger vehicles and two-wheeler volumes declining 25 per cent and 28 per cent, respectively, on a sequential basis.

The decline follows a sustained uptick in demand across most of the segments over December 2020-March 2021, suggesting a dampening of the improving consumer sentiments.

Inventory at the dealership levels for passenger vehicles (PVs) increased to 15-17 days in the previous month as compared to 10-15 days in March, it said.

In addition to the shutdown of dealerships due to the lockdown, Ind-Ra expects that the increase is due to OEMs replenishing inventory with dealers in view of the supply chain issues witnessed in the March 2020 quarter. While, inventory at two-wheeler dealerships remained steady at 30-35 days at end-Apri, it added.

This story has been published from a wire agency feed without modifications to the text.

  • First Published Date : 25 May 2021, 08:32 PM IST