New launches, low interest rates drive up car demand in December
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New launches, advance buying due to price hikes in January, decade-low interest rate on auto loans and positive sentiments helped bring fresh demand for passenger vehicles and two-wheelers during December, even as the auto industry remains cautiously optimistic about 2021.
Domestic wholesale volumes (from company to dealers) of cars, utility vehicles and vans rose nearly 14 percent in December to 252,998 units as against 222,728 units recorded in the same month last year, as per data supplied by the Society of Indian Automobile Manufacturers (SIAM).
Demand, which was expected to soften in December after a robust 40-day festive period, remained upbeat to the extent that certain models are still on a waiting period. "May be there is still pent up demand in the market which is driving the demand", said Kenichi Ayukawa, president, SIAM.
Models like Maruti Suzuki Wagon R, Ertiga and Swift have a waiting period of 2-3 weeks. Deliveries of Hyundai's Creta and i20 can be had only in the next financial year. Kia's compact SUV Sonet will be delivered to its customers only after two months.
SUVs remain the flavour of the season. Its share has risen to 38 percent this financial year (by December end), up from 34 percent last year same period. Besides the Kia Sonet, Nissan's Magnite also debuted in the SUV segment and many more are lined up for launch in 2021.Close
Domestic sales of two-wheelers rose 7.4 percent in December to 1.12 million units as against 1.05 million units clocked in the same month last year. Exports have grown much better than domestic sales registering 24 percent growth to 367,521 units.
Though demand has rebounded significantly from the lows of April-June quarter, SIAM noted that the pandemic has pushed the entire automotive industry back by many years and the priority will be to regain the peaks seen in 2018 and 2019.
"If we look at absolute sales during the period of April to December, we are at a seven-year low in two-wheelers, 10-year low in passenger vehicles, 10-year low in commercial vehicles and 20-year low in three-wheelers. This means industry has to work hard to get better volume and keep business healthy", added Ayukawa.
From the upcoming budget SIAM is seeking faster implementation of scrappage incentive scheme announced by the government several months ago, which is expected to boost demand for trucks and buses.
Almost every automaker from the passenger vehicle category increased prices with effect from January 1 in the range of 1-5 percent to offset the impact of high commodity costs, depreciated value of the Indian currency and increased logistics costs.
Though sales number for January will be known next month, according to market watchers, auto demand has continued to remain upbeat this month. While SIAM hopes to have a better year this year the apex lobby body has refused to provide a sales outlook."There is high level of uncertainty in the market. At the same time there is shortage of semiconductors and of shipping containers. There is the price impact of steel, logistics and others. It is therefore very difficult to predict market demand", added Ayukawa.