October auto sales preview: Recovery likely after nearly a year of pain
A large part of this recovery can be credited to the festive season as both Dhanteras and Diwali came in October, leading to a decent demand scenario in the market. While October may look much better compared to the past few months for the auto sector, can this be seen as a revival? Here's what experts say:
The auto sales numbers for October will be released on Friday and the consensus view is that after eleven months of relentless pain, there will be a recovery, especially for passenger vehicles.
A large part of this recovery can be credited to the festive season as both Dhanteras and Diwali came in October, leading to a decent demand scenario in the market.
Brokerage firm Nomura expects a single-digit growth of 3-5 percent in passenger vehicle sales. It forecasts a 16 percent year-on-year (YoY) growth in the sales of market leader Maruti Suzuki owing to festivals.
Mahindra and Mahindra (M&M) recently announced that it sold 13,500 units on Dhanteras, much better than last year's Dhanteras. “This festive season on the day of Dhanteras the auto division of the company delivered close to 13,500 vehicles across the country,” M&M had said in a regulatory filing.
Although the passenger vehicle segment may see a revival, there is still no respite expected for two-wheelers and commercial vehicles.
Nomura expects the two-wheeler sales to fall by 12 percent YoY in October while medium and heavy commercial sector volume decline is likely to be steepest at 49 percent YoY due to weak demand.
While October may look much better compared to the past few months for the auto sector, according to Nikunj Sanghi, chairman of Automotive Skill Development Council (ASDC), the numbers should not be seen as a sign of demand revival.
Sanghi maintained that the next four to five months are going to be very challenging for the industry. "Compared to the last festival we are seeing growth but we should not read revival into this,” he said.
"November-December is definitely a challenge and with the entire festival season gone in October, when we start comparing November YoY, we will see a dip in November this year," Sanghi told CNBC-TV18.
Sameer Kalra, founder of Target Investing, believes if November and December are stable in terms of sales, then "we have an improvement or a U-turn" or "this becomes mere a bounce".
Nishant Arya, ED of Jay Bharat Maruti, believes the positive sentiment may continue going forward, however, the 2-wheeler segment may take some time to recover.
Nomura estimates for October 2019 sales:
Maruti
Hero MotoCorp
Ashok Leyland
M&M
Eicher Motors
First Published: Oct 31, 2019 1:08 PM IST
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