[Auto] Low base, recovery in demand drive March auto sales into fast lane

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Auto companies racked up more than 100 per cent growth in sales in March on account of the low base of the same month last year.

However, industry executives warned the numbers must be seen in the context of last March, when seven days of sales were lost due to the lockdown and the pandemic began buffeting growth much before that.

The country had gone into lockdown on March 25.

“Sales numbers of March 2021 have been uncharacteristically high due to the extremely low numbers of March 2020, which was a reason for the lockdown. Hence, it cannot be used as a reference for industry standards. The truth is sales numbers are lower than 2015-16 levels,” said an industry executive.

Maruti Suzuki, India’s largest carmaker, reported a near 100 per cent jump in sales in March at 167,014 units against just 83,792 units last year.

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However, the carmaker registered a decline of 7.8 per cent in sales at a little more than 1.32 million units in FY21 as compared to slightly above 1.43 million units in FY20.

The company, however, said sales had returned to pre-pandemic levels. They registered a growth rate of 0.8 per cent over March 2019.

Mahindra & Mahindra (M&M) reported sales in March at 40,403 vehicles, compared to 6,679 in March last year.

At Mahindra we are witnessing very good momentum in demand. Bolero volumes for March have been the highest in this financial year and despite supply constraints we have been able to ramp up production of the Bolero Pik-up significantly during the month. We expect supply challenges to remain for the next two to three months and then ease out gradually,” said Vijay Nakra, chief executive officer, automotive division at M&M.

The momentum of high numbers was also witnessed in the two-wheeler space with Hero Moto Corp, the largest two-wheeler maker, ringing up a growth rate of 72 per cent over the corresponding month in the previous year.

The company had sold 334,647 units in March 2020.

The recovery in consumer demand and efficient collaboration with our global distributors have enabled us to achieve these numbers. While the pandemic continues to impact the global auto industry, we are witnessing strong preference for wide range of motorcycles and scooters,” said Sanjay Bhan, head of global business at the firm.

However, executives and analysts warned the rising number of Covid cases, semiconductor shortages, and high fuel prices remained key challengers for the sales momentum to continue.

Our interaction with leading channel partners indicates demand sentiment across segments except two-wheelers remains unaffected, despite second concurrent lockdown in certain parts (of the country). However short supply both in CVs and PVs are impacting retails to an extent 20-25 per cent. Two-wheeler demand continues to remain weak, leading to further inventory increase,” analysts at Prabhudas Lilladher said in a research report.