On January 1, 2021, all major automobile companies reported their sales figures for the month of December. Interestingly, the results were far better than expected and automobile manufacturers have ended 2020 on a very positive note. Almost every firm reported a healthy and significant increase in their sales. Let us take a look at important sales figures posted by some of India’s largest automobile manufacturers for the month of December 2020.

Important Sales Figures

Tata Motors Ltd reported a 21% year-on-year (YoY) increase in domestic sales to 53,430 units. The total commercial vehicle sales declined 5% YoY to 29,885 units, which had been mainly due to a drop in the sale of passenger carriers and small commercial vehicles. Car sales rose 84% to 23,545 units. The company stated that it will continue to bring improvements in its supply chain facilities Tata Motors also announced that it will ramp up its production in the coming months to meet the increase in demand.

Eicher Motors Ltd reported that the sales of Royal Enfield motorcycles increased by 37% YoY in December. This was led by an increase in the deliveries of models with engine capacity up to 350 cc. The company’s total sales stood at 68,995 units, compared with 50,416 units in December last year. Its exports rose 82% YoY to 3,503 units

Ashok Leyland Ltd reported an overall sales growth of 14% YoY at 12,762 units in December 2020. The sales of medium and heavy commercial vehicles declined 2% to 6,884 units. Exports rose 14.5% YoY to 905 units.

Mahindra & Mahindra Ltd reported a 10.3% YoY decline in overall auto sales at 35,187 units in December. The company’s commercial vehicle sales saw a decline of 21.1% YoY to 16,795 units in December, as compared to 21,390 units during the same period in 2019. Exports increased by 3% to 2,210 units. The Passenger Vehicles segment (which includes utility vehicles, cars, and vans) sold 16,182 vehicles in December 2020, a growth of 3% over the same period last year. The total tractor sales in December were 22,417 units, as compared to 17,991 units a year ago. The company stated that its overall sales have been affected due to a supply shortage of micro-processors (semiconductors) used in the Electronic Control Unit (ECUs). 

Maruti Suzuki India Ltd reported a total sales of 1,60,226 units in December 2020 led by compact vehicles, LCVs, and Vans. This is a growth of 20.2% over the 1,33,296 units sold in the same month last year. Its domestic sales rose 19.5% at 1,50,288 units and exports were up 31.4% at 9,938 units. 

Escorts Ltd’s agricultural machinery segment sold 7,733 tractors in December, the highest ever recorded in the month. The automaker registered a growth of 88% YoY against the 4,114 tractors sold in the same month last year. Domestic tractor sales grew 90% YoY at 7,230, while exports were up 63.3% YoY at 503 units.

TVS Motor Company Ltd announced that its December sales have risen by 17.5% at 2,72,084 units, as against 2,31,571 units sold in December 2019. The company’s motorcycle sales grew by 27% YoY at 1,19,051 units and scooter sales stood at 77,705 units.

What Led to the Increase in Sales?

Pent-up demand has been one of the major causes of a healthy increase in sales during December. This refers to a rapid increase in demand for a service or product, usually following a period of subdued or decreased spending. Also, there had been attractive year-end discounts that accelerated the sales of major automobile players’ during December. The offers and discounts offered by these companies during the holiday season would have encouraged the Indian population to purchase vehicles. Another important factor to be noted is that people prefer to own a vehicle for commuting amidst the Covid-19 pandemic. The number of people using public transportation has decreased rapidly.

As we had mentioned earlier, many automobile manufacturers had announced that they would increase the prices of their two-wheelers, passenger vehicles, or commercial vehicles from January 2021. Thus, there could have been an increase in vehicle bookings in December. 

Over the past few months, we have also been witnessing a very high increase in the sales of tractors. During the April-November period, tractor sales in India saw a 28.7% YoY growth. Industry experts have stated that this could be attributed to the better availability of finances and increased savings. The high demand could also be a result of the rise in minimum support prices (MSPs) and market-rate realisations. We can see that this increase in demand for tractors has continued in December as well.

However, many companies in the automobile industry have brought attention to the fact that they are not receiving essential parts for their production activities. This has been mainly due to the global shortage of shipping containers. Due to this issue, automakers in India are bracing for a parts shortage and possible production losses over the next 3-4 months.

Automobile manufacturers would soon post their Q3 results in the coming weeks. We would be able to obtain better clarity of their performance then. The shares of these automobile companies could also show a rally in the days to come.