Festival season sales trim auto inventory but fail to excite investors – Livemint


The festive season of Navaratri and Diwali arrested the 12-month decline in auto gross sales however the Nifty auto index, that rallied practically 12% in October, has shed 2% since Friday when most auto companies introduced their gross sales numbers. Seems just like the near-term challenges that the trade faces proceed to hang-out traders.

Certainly, good retail gross sales have boosted sentiment of authentic tools producers (OEMs), shoppers, and traders. Based on Motilal Oswal Monetary Providers Ltd, “Whereas retails set new data, the OEMs’ deal with stock correction resulted in a year-on-year (yoy) decline in two-wheelers, passenger automobiles and tractor wholesales.”

Upbeat retail gross sales have trimmed stock ranges, which will help companies scale back reductions and put together for replenishing seller channels with BS-VI automobiles.

Word that inside the auto pack, passenger automobiles and two-wheelers fared higher when in comparison with industrial automobiles the place gross sales continued to contract.

October passenger automobile gross sales numbers of Maruti Suzuki India Ltd and Hyundai Motors India Ltd have raised hope of a restoration. Although home passenger automobile gross sales declined 6% year-on-year in October, it was a lot decrease than the 30% decline reported for the September quarter.

Even within the case of two-wheelers, the 15% yoy decline in October gross sales although worrisome, was higher than the 20% decline for the September quarter. Analysts stated their seller checks reiterated administration commentary that stock ranges are right down to 30 days from the sooner 55-60 days, which was the very best for the sector.

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A couple of comparable to Royal Enfield and Bajaj Auto Ltd reported better-than-expected gross sales, although TVS Motor Firm and Hero Motocorp Ltd’s steep double digit decline trace at extra ache within the months to come back.

In the meantime, the scenario continues to be grim for industrial automobiles. Medium and heavy industrial automobile gross sales sagged 56% yoy indicating that the ache from subdued motion of products and elevated axle-load norms continues.

The Road’s response to auto gross sales numbers reveals that traders stay a nervous lot. Usually, gross sales have a tendency to say no after the competition season, which means that numbers might dip once more in November and December, making it one other quarter of ache.

After all, a lot is determined by the BS-IV stock mendacity with firms and sellers. Most would face the problem of clearing BS-IV inventory to make approach for BS-VI automobiles for subsequent yr. As well as, there may be uncertainty on the pricing of BS-VI automobiles and shopper urge for food for a similar.

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