Although festive season demand may provide some temporary relief to the auto industry in the next two-three months, the continued disproportionate wholesale billings by original equipment manufacturers could lead to increased stress for dealers if uptake is lower than expected, according to a report.
In its latest report on the auto sector, India Ratings and Research (Ind-Ra) on Friday said retail sales are likely to continue to lag behind wholesale sales in September 2020 although the sector has reported a month-on-month rise in sales over May-August 2020 after the washout in April.
“After an above-average acreage backed by adequate monsoon, the prospects of a robust kharif harvest have original equipment manufacturers (OEMs) hoping for a retail demand revival from the rural side during the upcoming festive season,” the ratings agency said in a statement. It added that sales are likely to remain sluggish in September, especially on the retail side, “due to the inauspicious period of Shraadh”.
The retail demand also improved sequentially over April-August 2020, the sales volumes are still much lower than wholesales. But, passenger vehicle (PV) and two-wheeler (2W) retail sales volumes fell 7 per cent and 29 per cent year-on-year, respectively, in August 2020.Amid the increasing cases of COVID-19 and job losses across the sections of the society, consumer sentiment remains weak; the overall retail sales in August 2020 were only around 71 per cent of the August 2019 levels, it said.