December 2020 car, SUV sales up nearly 24 percent: FADA

Vehicle Sales and registration data for December 2020 just been released by the Federation of Automobile Dealers Associations (FADA), showing demand for most segments has maintained positive momentum. In the last month of December 2020, overall industry sales – including two-wheelers, three-wheelers, Passenger Vehicles (PV), Commercial Vehicles and tractors – totalled 1,844,143 units, which is 11 percent more than the same period last year and even betters last month’s sales performance by 1 percent .

• Passenger vehicle sales grow 23.99 percent year-on-year (YoY) in December 2020
• New car launches and fear of the price hike in January kept demand for going
• Demand has seen waiting periods rise to eight months for some manufacturers

It remains to be seen if the momentum can be maintained in 2021. Challenges like slowed-down supply of semiconductors and some yet-to-be-resolved supply chain issues could also prove to be sales speedbreakers .

“Automobile registrations for the first-time witnessed YoY growth in this financial year by growing 11 percent in the month of December. A good crop season, better offers in 2W segment, new launches both in PV as well as 2W and a fear of price increase in the month of January kept the demand going. Supply side issues in passenger vehicles continued for the 2nd straight month thus making waiting period as high as 8 months in select OEM vehicles,” said Vinkesh Gulati, president, FADA.

Price hikes may lead to temporary blip in January 2021 sales

The month of December saw good spill over demand continuing from festive season and pre-buying due to price hike announcement, but the demand for “vehicles in January looks to be bleak. PVs may witness growth if demand supply mismatch is resolved. With recent hikes announced by all manufacturers, FADA expects a temporary blip in demand as customers will take time to absorb the same,” said Gulati.

With India gearing up for the vaccination drive, FADA expects this will lead to more mobility, restoring life back to normalcy and business as usual. With gradual opening up of educational institutes/colleges, the organic demand for two-wheelers should slowly start coming back.

The government’s recent approval for Rs 12,000 crore infrastructure projects is expected to see positive effects in the CV space, though full recovery is only expected in all the segments of the industry from April 2021 onwards.

With no further price hike shocks, demand spurring budget by the central government, COVID vaccine’s effectiveness to fight the current and the new strain of virus with no/minimal side effects, FADA remains guarded in its optimism for auto sales during last quarter of this fiscal year.

In terms of average inventory for the passenger vehicle segment is in the range of 15-20 days, while two-wheeler is at 30-35 days respectively.

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