Festive season: A hope for automakers

Update on the Indian Equity Market:

On Wednesday, NIFTY closed 0.1% higher. Among sectoral indices NIFTY PSU Bank (+2.1%), NIFTY Auto (+1.3%), NIFTY IT (+1.0%) closed higher while NIFTY Media (-1.3%), NIFTY Realty (-0.9%), NIFTY Metal (-0.3%) ended on a negative note. The biggest gainers were HCL tech (+3.5%), Eicher Motors (+2.5%), Infosys (+2.3%) whereas Adani Ports (-6.1%), Bharti Airtel (-3.7%), Zeel (-3.4%) ended with high losses.

Excerpts from an interview of Mr Vinkesh Gulati, Vice President FADA (Federation Of Automobile Dealers Association)

• The entire auto sector in our country has shown a downturn. With all major OEM’s showing a decline in number, it is the festive season which gives hope to automakers.
• Mr Gulati says sentiment during festive season goes up and enquiries start to come in. Passenger vehicle (PV) segment is showing similar signs this year too.
• It is expected that better conversions will happen as compared to the last six months.
• He says the two-wheeler market is not showing good signs. The overall situation in the two-wheeler market is grim.
• In the past year, the passenger vehicle (PV) segment has shown decline of 8-10 percent. This year the expected decline is less 1-2 percent or similar as last year.
• The two-wheeler segment is expected to degrade and continue to decline around 8-12 percent.
• Mr Gulati says the reason behind the decline of the 2-wheeler segment is because it is a reflection of rural and semi-urban market sentiment.
• 2 wheelers segment is majorly based in the rural and semi-urban market and the sentiment there is still not changed. Rural market is still not picking up festive hype.
• He says Automakers are offering steep discounts to increase sales and the festive season is the best time to buy.
• Speaking on the discount front, he says, discounts are similar to what they were in Navratri. Furthermore, discount is given by dealers on their own to liquidate their inventory.
• From December onwards it is expected that all OEM’s will come out with their BS-VI variants and again during December there will be discounts on BS-IV to liquidate inventory.