• India is the 5th largest auto market in the world with market size estimated to be $118 Billion. Domestic automobiles production increased at 2.36 per cent CAGR between FY16-20 with 26.36 million vehicles being manufactured in the country in FY20 with the two-wheeler segment domination the sales.
  • The Indian Automobile along with Auto-Components industry slumped during the lockdown between March 2020 and June 2020. According to Society of Indian Automobile Manufacturers(SIAM), The total production of Passenger Vehicles, Three Wheelers, Two Wheelers and Quadricycle in the month of June 2020 was 1,094,363 as against 2,253,407 in June 2019 facing degrowth of (-)51.4%. Overall the industry has faced a 75.5% degrowth between Q1FY20 and Q1 FY21.
Passenger Vehicles
  • However, the story seems different for July, Passenger Vehicle sales were up 69% in July 2020 as compared to June 2020 falling short of just (-)1% as compared to July 2019 sales indicating a return to normalcy in the near future.
  • Maruti Suzuki logged an 88% growth in sales as compared to June 2020 along with making a 1.3% YoY Growth. Maruti sales were led by entry-segment Alto, WagonR and sPresso.
  • Tata Motors flew past Maruti-Suzuki in terms of sales growth. Tata Motors sold 15k units, 43 per cent up from 10,485 units sold in July 2019. Despite not-so-great Q1 results on 31st July Friday, Tata Motors shared zoomed at 6.5% after the market opened on 3rd August, Monday.
  • MG motor a comparatively new player in the market showed a rise of 40% in sales YoY selling 2,105 units in July 20 as compared to 1,508 in July 19
July 2020 Car Sales – Snapshot - Auto Punditz
Passenger Vehicle Sales
The Farm Equipment Sector and rise in Agriculture
  • Mahindra’s domestic vehicle sales of 11,025 units were 34.5 per cent down on last year’s numbers. However, it’s Farm Equipment Sector (FES) reported a 27% growth in the sales of tractors to 25,402 units which are by far the highest July sales according to company reports.
  • Escorts Ltd on Saturday reported a 9.5 per cent increase in tractor sales at 5,322 units in July. The manufacturer has also made a 21.1% YoY growth in terms of sale.
  • VST Tillers has reported total sales of 8226 power tillers and 2616 tractors during the period April-July 2020, as compared to 7904 power tillers and 2404 tractors amounting to 6% growth during the period April-July 2019.
  • The reason behind this is the rise in the rural market and an increase in agriculture as an occupation due to lockdown in most urban and metro areas causing a loss of occupation in cities.
OEMs
July 2020
July 2019
% change
Mahindra & Mahindra
24,463
19,174
28
Escorts4,9534,50510
VST Tillers10,84210,3086
Two Wheelers
  • Hero MotorCorp managed to sell over 514,509 units indicating a 14.4% growth Month-over-Month in sales (June-July 2020)
  • Suzuki Motorcycle India Pvt. Ltd. had a 37% appreciation in sales to 31,421 units in July 2020. Exports stood at 2,991 units in the month gone by.
  • Eicher Motors Owned Royal Enfield showed a 6% increase in sales Month-On-Month basis ending July. Royal Enfield claimed that its Interceptor 650 was the highest-selling motorcycle in the U.K. over the past 12 months, with the Himalayan coming in at fourth.
  • TVS Motor Company registered a sales growth of 27% in July 2020 with 252,744 units as against 198,387 units in June 2020. TVS Motor Company registered sales of 252,744 units in July 2020 as against 279,465 units registered in the month of July 2019.
Commercial Vehicle Sale
  • Ashok Leyland‘s sales might have declined 56% per cent YoY but have managed to double sales on a monthly basis with 4775 models in July 2020 as compared to 10,926 models in June 2020
  • In the Commercial Vehicles segment, Mahindra and Mahindra sold 13,103 vehicles in July 2020, as against 15,969 vehicles in July 2019.
Mahindra Tractor, Farm Equipment sales grow 10% - Car sales down 57%
Mahindra and Mahindra Total Sales Figures (Source:RushLane)
  • The commercial vehicle segment is impacted the most due to travel restrictions being imposed all across the country and limited passes being issued to transporters. Moreover, with reduced sales, the transporters are having to pay for road taxes, permits and other secondary charges.

The COVID-19 reduced the profits for transportation business while forcing many to shut shop. Although, transportation was of utmost importance in transporting essentials it couldn’t push demand for automobiles whatsoever.

Despite the reduction in Oil prices, the government increased tax on Oil which did no good to the automotive industry. With respect to commercial passenger vehicles, enforced social distancing norms has caused a reduction in the use of public transport/buses.

As the world recovers, you can expect a steady growth in automobile demand in in Light Commercial Vehicle(LCV) Category more than Heavy Commercial Vehicle (HCV) Category. Two wheeler sales and Passenger Vehicle segment should resume and can be expected correlate with the reduction in impact of COVID-19 and the implementation of Make-In-India along with the Atmanirbhar Bharat moment.

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