Due to the improvement in semiconductor chip supply, passenger vehicles (PVs) sales may have benefitted in the month of June in what could turn out to be the best ever June for wholesales, analysts say.
Demand trends for PVs have remained resilient despite the price increase undertaken due to pent-up demand. However, the waiting period remains exorbitant for top-selling models between 1.5 month to 6 months, as per Dolat Capital
“We expect PV wholesales to benefit from improving chip supplies, with June volumes being the ‘all-time best June’ wholesales. We expect a further improvement in July. One key risk to watch out for is the progress of monsoons,” research firm Nomura said.
Overall, two-wheelers, PVs, 3Ws, CVs, and tractors wholesale volumes are expected to grow by 7.0%, 19.5%, 4.0%, 65.5% and 3.0% YoY respectively, as per Motilal Oswal.
However, the rising prices and monsoon deficit remains a concern.
As of June 27, the monsoon has been 10% below average in India as some states in the north and west India has seen significant deficiency. “Crop sowing to date is around 20% below last year and can impact rural demand if the monsoons do not pick up,” Nomura said.
The delay in monsoon has also impacted the demand for tractors. “Agricultural demand is subdued currently and commercial demand remains flat. Inventory in the system is around 30 days,” analysts at Motilal Oswal said.
Demand trends in the two-wheeler industry continue to be weak as chip supply constraints remain an overhang. Premium motorcycles above 150cc have been facing chip shortages leading to a waiting period of around 15 days for Bajaj Auto, reports say.
Preference for electric vehicles has remained high, at around 3.6% of the industry in June. However, sales have been impacted for some players due to supply shortages and some of the recent reports of battery explosions have also impacted the momentum, as per analysts.
Demand for commercial vehicles (CVs) may see some softness as infrastructure activities have been stalled due to the monsoon.
Volumes would have been even higher, likely breaching earlier records, had market leader Maruti Suzuki not gone in for a week-long maintenance shutdown. Passenger cars, sedans and utility vehicles sales registered record volumes of 334,311 units in October 2020, and thereafter of 321,794 units in March 2022.