InvestorQ : How has been the sales numbers for the auto companies in the month of July 2020?
sarah Leo made post

How has been the sales numbers for the auto companies in the month of July 2020?

Rashi Mehra answered.
1 year ago

While YOY growth may still be tepid, and to some extent misleading, it must be admitted that the sales of passenger vehicles and two-wheelers saw steady sequential growth in July. The month on month growth was heavy in entry-level cars and motorcycles.

To an extent this sequential growth has been driven by robustness in the rural economy. A good Kharif crop, healthy monsoon and limited impact of COVID-19 in rural areas were responsible for a sharp turnaround in sales. Rural is driving higher auto sales.

Retail sales have improved sequentially from June due to higher demand in rural and semi-urban markets. Post COVID, there is also a shift in customer preferences for personal transport to avoid infections due to social intermingling. Two-wheeler and tractors were also buoyant.

Officials of FADA have affirmed that assuming there will be no further lockdown and further unlocking measures will continue, vehicle registrations are expected to improve from the numbers reported in July and get progressively higher as the months pass.

More than the demand factor, it is the supply-side constraints that are really putting a limit to auto sales in India. Demand normalcy may be distant but supply chains of raw materials and finished products could hold the key. Commercial vehicle sales continue to be weak.