Auto sales rebound in July though pandemic impact still weighs

Domestic passenger vehicle sales increased by 73% m-o-m to 1,82,779 units in July'20, with industry executives expecting a further improvement in demand this month as economic activity recovers post-lockdown.

Passenger vehicle sales were, however, lower by 3.9 % y-o-y indicating lingering effects of the disruption caused by the pandemic.

Total production of passenger vehicles, three-wheelers, two-wheelers and quadricycle in the month of July 2020 fell by 29.36% y-o-y to 1.71 mn units.

"After a few consecutive months of plummeting sales in the post-COVID scenario, there are signs of green shoot in passenger vehicles and two-wheelers, where the year-on-year de-growth is much lesser than in the previous months," said SIAM president Rajan Wadhera.

"The sales numbers in the month of August would indicate if this is a sustainable demand and not just pent-up demand," he added.

"The month of July was significantly better than the preceding months and it instilled some confidence into the industry. Many OEMs have registered improved sales vis-a-vis the past few months, and this brings back a sentiment of resolve to the sector," said SIAM director-general Rajesh Menon.

Small car segment has been the key driver of sales growth for Maruti Suzuki, India's largest automaker, as pent-up demand emerged in recent weeks while closure of local trains and metros also prompted more people to buy small cars, Maruti executive director Sunil Kakkar had recently said at a Steelmint webinar.

Flat steel demand and prices are likely to be supported by the gradual recovery in auto sales, though steel producers and automakers remain locked in negotiations to settle prices for quarterly and half-yearly sales contracts. Steelmakers are, however, gearing up to sell more steel to the auto-sector as the government's push for localization may prompt more auto companies to opt for domestically-produced special steels.

Article by: Nikita Baid