Carmakers see record dispatches in Jan

Mumbai: Indian carmakers registered record dispatches for the third straight month in January when they shipped 295,000-298,000 passenger vehicles to dealers on the back of growing consumer appetite for personal mobility in the wake of the Covid-19 pandemic and sustained pent-up demand.

The previous best for the first month of the calendar was 285,000 units in January 2018. The number of vehicles billed to dealers grew 10-12% year on year in January, the highest growth rate seen in five years, industry executives said.

This was the sixth month in a row when passenger vehicle wholesale volume grew in double digits, following on one of the most protracted slowdowns in the two decades amid the lockdown to contain the pandemic.

Average volume growth for the past six months was 17.65%, substantially higher than the last 10 years’ compounded annual industry growth, data compiled by ETIG shows.

Year-on-year passenger vehicle sales in January declined four times in the last 10 years, with the sharpest decline in 2014 (9.3%) and highest growth in 2011 (24.7%).


The difference in volume growth rate between carmakers is likely to widen because some companies are facing higher supply constraints than others.

With retailers sitting on the lowest ever inventory at the end of December 2020, it was almost a given that vehicle makers will have enough breathing room to push inventory in the market. The double-digit volume growth in January is likely to be supported by the shrinking network inventory and stable retail momentum.

“The January month was again a month of demand chasing supply,” said Shashank Srivastava, executive director, sales and marketing,

India Ltd. “Most OEMs (original equipment manufacturers) started the month with extremely low stocks and with healthy bookings inflow this was the obvious outcome.”

Srivastava declined to comment on absolute volumes at the country’s top carmaker in January.

Leading carmakers have highlighted in their respective earnings calls that inventory levels dropped to record lows and some fast-selling models had inventory levels of less than 10 days. Consequently, the waiting period of the many models has increased to four-six weeks.

Maruti Suzuki management told investors that the company has 215,000 bookings and network inventory of 21,000 units. Tata Motors executives told analysts that inventory levels have shrunk to a record low.

Vinkesh Gulati, president of the Federation of Automobile Dealers Associations, said demand momentum is strong and inventory in the channel is comfortable at 15-18 days.

“In the passenger vehicle market, the sentiment is quite positive, the order book position is strong… If not for supply chain issues, the industry would have registered a strong growth year on year,” Gulati said. “However, due to shortage of parts, we expect registration to fall by low single digits in January. The demand momentum is likely to sustain and we expect double digit growth in FY22.”

Forecasting agencies Jato Dynamics and IHS Markit have guided for a 22-33% growth in passenger vehicle sales for 2021. However, both the agencies have flagged risks emanating from global supply chain challenges on account of shortages of semiconductors, steel and shipping containers.

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