Indian automakers continued to ship more vehicles from their factories than last year, aided by a recovery in demand and a low base even as supply-side constraints persist, according to estimates by four brokerages.
Factory-gate shipments of most automakers for January rose in the range of 3-25% over the year earlier, data compiled from research reports of Motilal Oswal, Emkay Global, Dolat Capital and Prabhudas Lilladher showed. Only Mahindra & Mahindra Ltd. is expected to report an up to 22% year-on-year decline in wholesales.
The automakers, barring Escorts Ltd. and Maruti Suzuki India Ltd., also saw sales rise over the preceding month according to the brokerage estimates.
“Dispatches for Maruti Suzuki and M&M have been affected by supply constraints,” Raghunandhan NL, and Mumuksh Mandlesha, analysts at Emkay Global, said in a separate note. “With good demand and supply chain constraints, the passenger vehicle inventory remains at less than seven days with a waiting period of four-six weeks for fast-selling models.”
The pandemic has fuelled demand for personal mobility. But Indian automakers, recovering from several quarters of slowing sales, have not been able to keep up with supply. A global shortage of microprocessors—the brains of electronic components used to control everything from anti-lock braking to airflow systems of cars—is making a quick ramp-up difficult after Covid-19-led disruption stalled production and sales earlier in the year.
“Demand momentum continues to remain positive for passenger vehicles. We expect demand momentum to sustain for at least next two quarters, led by upcoming model launches by Maruti Suzuki and Tata Motors, higher demand from first-time buyers, and expectations of better kharif season,” Deep Shah and Amber Shukla, analysts at Prabhudas Lilladher, said in the note. Passenger vehicle demand in the urban markets, they said, has started to pick-up, too, as inquiries were higher 8-10% year-on-year in January.
Pending bookings and pre-buying in anticipation of price hikes, according to analysts, also helped the passenger vehicle segment.
Domestic two-wheeler dispatches, however, are expected to grow in single digits even as urban demand improved. The two-wheeler segment is seeing lower-than-expected retails, while inventory levels have increased compared to December, Dolat Capital said.
But commercial vehicle segment, analysts said, are seeing better inquiries compared to last year. “OEMs have increased price by 2-3%, while keeping discounts stable at 15-17%. Inquiries are better than last year but transporters are holding back purchases on the expectation of higher discounts,” Jignesh Gandhi and Vipul Agarwal, research analysts at Motilal Oswal, said in their report, adding growth momentum continues in light commercial and small commercial vehicles.