Lockdown relaxation accelerated June auto sales growth: Ind-Ra

Relaxation of localised lockdowns in most parts of the country led to the sequential as well as year-on-year increase in domestic auto sales volumes in June 2021, India Ratings and Research (Ind-Ra) said.

Accordingly, the agency, credited the trend on the reopening of automotive dealerships and the resumption of operations by original equipment manufacturers (OEMs) along with a lower base in previous periods.

"However, the June 2021 volumes remained much below historical peaks (35 per cent below June 2019 levels). The PV segment resumed its outperformance compared to the industry on account of increasing preference for personal mobility by 119 per cent YoY."

Besides, the report pointed out that consumer demand for the 2W segment remained tepid, at up 4 per cent YoY.

"While motorcycle sales increased by 10 per cent YoY, and scooters sales fell by 10 per cent YoY. 2Ws has been more impacted by the increased cost of ownership amid price hikes by OEMs coupled with historically high fuel prices in India and workplace and colleges remaining closed."

"3Ws continued to drag with a 9 per cent YoY decline due to reduced preference for shared mobility. The growth trend in exports volumes resumed in June, after being disrupted by the second covid wave in May, as export volumes increased 82 per cent YoY."

Furthermore, the total production in June 2021 improved by 110 per cent on a monthly basis as OEMs resumed operations at their plants after taking 10-15 days of shutdown in May 2021.

"Retail sales also recovered in June 2021 - with PV and 2W volumes increasing 43 per cent and 17 per cent YoY, respectively, due to the reopening of automotive dealerships. Inventory at the dealership levels for PVs increased to 30-35 days in June 2021."

"Ind-Ra believes that the increase was due to OEMs replenishing inventory with dealers in anticipation of a pent-up demand and supply chain issues on account of a shortage of semiconductors."

In addition, the agency said it expects the recovery in sales volumes to continue in July 2021, driven by the lockdown restriction being lifted in some more parts of the country and a steady decline in daily new covid cases.