Demand starts revving up for sputtering auto industry

Mumbai: Wheels are moving again for India’s auto industry — the top three car makers are seeing bookings and enquiries rise to 85% of pre-Covid levels. The industry is saying this reflects pent-up demand.Maruti Suzuki, Hyundai and Mahindra & Mahindra — which account for 75% of the overall market — have witnessed bookings of roughly 200,000 units over a month-and-half, indicating a swift pick-up. Typically, 85-90% of bookings translate into sales. Even if conversion goes down somewhat, industry executives said sales will still be healthy.Shashank Srivastava, ED (sales & marketing) at Maruti Suzuki, said retail activity started only by mid-May. Now, with almost 95% of outlets open, the company has seen enquiries and bookings reach 80-85% of last year’s levels.“We believe that this rapid progress is partly because of pent-up demand. Subsequent to this, the fundamentals of economy and the Covid situation will determine demand,” said Srivastava.76436133Various research reports indicate that consumers will be seeking more value in response to expected lower income levels. The preference for personal transport is clearly high as consumers want to avoid public transport and shared mobility solutions.Maruti Suzuki has seen hatchbacks and small cars account for 65% of overall sales in past 45 days. The share of small cars at the end of FY20 was about 55%. “The data available is fairly recent and therefore we cannot come to a definitive conclusion, but the trend for increased interest in smaller cars is evident from current enquiries and booking data. We have to see if the trend will sustain,” said Srivastava.Maruti Suzuki’s nearest rival Hyundai Motor India saw an 8% year-on-year growth in retail for the first 15 days of June. Tarun Garg, director (sales & marketing) at Hyundai Motor India, said bookings and enquiries are already at 90-95% of last year and the company is witnessing traction across the portfolio — right from the Santro hatchback to new Creta SUV.“The momentum is good and things are positive on all parameters, we hope it sustains. But remember, bookings and retail are different from despatches from the factory (which gets reported). My expectation is that we will end June this year with at least 70% retail of last year,” added Garg.At a recent earnings conference, Mahindra & Mahindra said the company may reach 50% of its normal monthly run rate or production by end June.Demand pick-up is particularly swift in the rural and semi-rural areas, while sales from metros are still lagging due to higher incidence of Covid-19 cases.Mahindra & Mahindra told investors that sports utility vehicles such as Bolero and Scorpio, popular in rural areas, are doing better, as are small commercial vehicles, which have seen a 20% rise in enquiries in June over the same month last year.Veejay Nakra, CEO (automotive division) at Mahindra & Mahindra said the company was seeing “increasing level of enquiries both through walk-ins in upcountry showrooms and on our very recently launched digital ownership platform”.Industry executives, however, said there are still supply chain issues, especially the four-district lockdown in Tamil Nadu — a production hub.

from Economic Times https://ift.tt/2UUg1uR