Car buyers are a lot more wary now than during the festive period, says Sundaram Finance

The commercial vehicle (CV) space is directly tied to economic sentiments and through the festival season there was a terrific movement in the CV sector. While the momentum through the festival season continues, the buyers are a lot more circumspect, said Rajiv Lochan, MD of Sundaram Finance on Wednesday amid the rising rate environment.

“Our readings from the ground indicate that while we expected the momentum through the festival season to continue, buyers are a lot more circumspect in terms of asset prices that are now reached and the buyability of the assets itself,” he said.

Crude oil prices have dropped in the last few months, so buyability for many of the operators’ remains at the same level that it was when crude was not around $100 per barrel levels. This also forces buyers to be a lot more circumspect before making some of these large investments particularly in the M&HCV segment where asset prices are now not Rs 40 lakh – Rs 50 lakh.

“December 2018 was an all-time high in the Andhra market and our sense is we will probably, three quarters on the way, that is likely where we will end up given what we are seeing in the market right now,” he added.

The last few quarters have been strong for the vehicle finance sector as it has recovered from the downcycle of the commercial vehicle (CV) space in general, however, the broader automotive space has been patchy through four quarters.

“Inflation continues to remain an important metric for policymakers, regulators and the government,” he noted.

Andhra and Telangana are important markets not just for Sundaram Finance but for the CV manufacturing sector itself. There are a large number of retail buyers in the segment and December tends to be a season when the buying tends to peak in Andhra and Telangana markets.

Last three years, there was a slowdown in the CV segment, so the Andhra market has been somewhat muted in December.

“Post festive there is always a slowdown and this year Diwali, Dhanteras being in October, November has been somewhat slower than normal but the December season in Andhra Pradesh and Telangana, which seems to be a bellwether for us, is somewhat muted and so it feels like a lot of the buying is replacement buying and not expansion buying,” he explained.