Looking to pick auto stocks? Here’s a glimpse of scenario from vehicle demand

auto stocks

Indian Market
by 5paisa Research Team Last Updated: 2022-10-04T11:49:02+05:30

Total vehicle retail sales for September grew 11% in the country led by strong growth clocked by commercial vehicles and three-wheelers, according to data compiled by the Federation of Automobile Dealers Associations (FADA).

A nearly double-digit rise in sales of the big volume drivers--two-wheelers and cars--also supported the overall industry sales.

Still, this was not enough to pull the overall volumes in the industry to the pre-pandemic level.

When compared with September 2019, a pre-Covid month, total vehicle retail sales fell by 4% in September 2022 but narrowed the gap from previous months. The passenger vehicles segment continues to show extremely healthy figures by growing 44% while three-wheelers, tractors and commercial vehicles also closed in the green with an increase of 6%, 37% and 17%, respectively.

On the flip side, the two-wheeler segment is yet to show signs of any revival and fell as much as 14%.

Segment-wise sales

The two-wheeler segment grew 9% over the previous year but remains depressed due to increased input costs which has resulted in companies raising prices five times in past one year. Apart from this, the RBI’s fight against inflation saw rate hikes which continued to make vehicle loans expensive.

Two-wheelers, especially entry-level vehicles, are facing the toughest scenario thus dragging the entire segment.

The three-wheeler segment continues to see structural shift towards electric vehicle (EVs). This is also reflected in extremely healthy growth rate of e-rickshaws. Apart from better availability of vehicles with full range products including alternate fuels, customers have started using public transport and rickshaw service thus fuelling demand in this segment.

While the commercial vehicle segment, a barometer of business activity, grew by 19%, it is the heavier segment (bus and trucks) which showed a healthy growth of 40% YoY. This is due to better availability of vehicles, festivities, bulk fleet purchase and the government’s continued push for infrastructure development made this segment shine, according to FADA.

Meanwhile, passenger vehicles segment continued its strong run by showing a growth of 10% YoY and 44% when compared to September’19, a pre-covid comparable month. Better availability due to easing semi-conductor supply, new launches and feature rich products kept customers glued to dealerships for getting their favourite vehicles during the auspicious period. The waiting period continues to range between three months to 24 months especially for SUVs and compact SUVs.

In totality, except tractors, which decreased by 1.5%, all the other categories were in green.

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