See cheer returning to autos this festive season: Experts

Also read: Bajaj Auto eyes 4-lakh sales in Sept-Oct

On sectoral plays, Shethiya is bullish on Maruti, Tata Motors-driven by JLR sales and Hero Moto.Below is the verbatim transcript of Ajay Shethiya and Sundeep Kumar Bafna\\'s interview with Anuj Singhal and Ekta Batra on CNBC-TV18.

Ekta: One of the things that Sonia Shenoy told us was that one of the reasons why we saw a pick up this time around in the August auto sales especially in the two-wheelers is because of festive stocking which is taking place on a year-on-year (Y-o-Y) basis. So the base is different. We had Diwali which is coming in October as opposed to November last year, how much of an impact is that in this time sales figures that we are seeing?

Bafna: What you have heard is true because as such all dealers have stocked themselves upto the bream. So the last month in the sense August we had a lot of a billing and this would continue this month also because again after Ganpati there will be 15 days of lull which is the shraddh period and after which October 2 is the Dusshera. So we feel that after that - September 21 onwards, the real season will start which is the Navratri, Dusshera and another month for Diwali. So in the whole time, dispatches would not happen the way we would want it. So all dealers are right now stocking up to their bream in this month and the coming month. So that we can deliver in the season period.

Ekta: What kind of inventory levels are you working with now? Was it as much as maybe last year or are you getting liquidating inventory much more easily?

Bafna: It is moving much more easily than last year but we didn’t see that kind of a great jump in the Ganpati sales as far as two-wheelers go but four-wheelers, in Maruti we have seen a good acceptance of our new product, the Celerio and the Ertiga CNG, the WagonR CNGs are doing extremely well right now in the markets.

Anuj: What is your overall call especially on the passenger vehicle car sales where we have seen growth after 17 months of decline and same points here, would you read the data with a pinch of salt because of all the issues about festival stocking or would you say that data looks quite good?

Shethiya: If you see there has been a reversal in terms of the overall trend so passenger vehicle has seen a positive growth in the month of May which came after 17 months of decline and that momentum continues for the month of July in the month of August as well. Now two things which have played out this month is last year around the Ganesh Chaturthi was in September, this year it is something which is in August. Also the shraddh period last year started from September 19 and continued till the end of the month. This year around the shraddh period would start from September 9 and will end on September 23. So there is a lot of pre-buying which has happened before the shraddh period and that is something which has pepped up the overall year-on-year growth. Having said that based on our dealer interactions we understand that footfalls have been improving, the conversions are taking place. So overall the sentiments have turned positive, customers are coming back, also what dealers have been indicating is that on the financing side, it is something which has been more lucrative. There are multiple finance schemes which are going around. So all these factors have played out and led to a strong Y-o-Y growth where we feel that the momentum will continue over a period of time.

Anuj: In terms of commercial vehicles now, what is your sense? Do you feel that the cycle is turning around or at least is at the cusp of turning around or would it be too early to say that right now?

Shethiya: There are mixed feelings, which we are getting based on either the interaction with the dealers or the financials but definitely if you see the rate of decline has curtailed over a period of time. So if I see for the last few months, the decline has been in single digit as compared to a strong double digit growth which we had seen in the past.

On the commercial vehicle side, also few of the things which are linked positively is the discount has not been moving up over the last two-three months, so more or less the discounts have remained stable. There is an element where freight rates not across the routes but in some pockets have started inching up and third thing is the comment from the financing guys indicate that there could be possibly some turnaround happening in the industry.

So second half of FY15 might turn out to be slightly better as compared to what we have seen. What we have also done is that if I see for the last 35-40 years, the commercial vehicle cycle, the cycle would last for three-four years whether it is on the up cycle or the down cycle and at this point in time we are in the third year of down cycle. So once this comes to an end, definitely there would be a retracement from the current levels and you could see the commercial vehicle growth happening much better as compared to what we have seen in the past.