As per a report on the Automobile sector by Motilal Oswal Financial Services; leading industry channel partners reflect optimism for an overall good festive season for automobile retail despite the slow start.
Motilal Oswal has said in a report, which reads: "Current two-wheeler inventory at 40-60 days is in line with expected demand for the remaining festive season; private vehicle (PV) inventory is also at comfortable level of 25-35 days. Inquiries are at par with last year. Large Commercial Vehicle (LCV) demand has recovered and is now gaining momentum. Demand for Medium & Heavy Commercial Vehicle (M&HCV) is from infrastructure and construction sectors. Overall, consumer sentiment has improved; however, urban customers are still cautious given the uncertain environment,"
Wholesales in Oct'20 are expected to grow YoY for all segments (excl. M&HCVs) due to good demand and normalizing of supply chain bottlenecks at the OEM level. Demand remains skewed toward semi-urban and rural market for 2Ws/PVs. Tractor demand remains strong with growth in retails in most markets, however, capacity constraints are expected to restrict wholesales in Oct'20.
According to the broking firm, in Oct'20, wholesale volumes are estimated to grow 17.5%/15% for 2Ws/PVs due to sustained demand and inventory refilling. Decline in commercial vehicles (CV) (excl. Tata) was restricted to 6.4% YoY, driven by 18% growth in LCVs and 12% YoY decline in M&HCVs. Wholesale volumes for tractors should be flat YoY due to supply side constraints. Wholesales would be higher than retails due to inventory refilling for anticipated festive demand.
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