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Moneycontrol Pro Panorama | Auto sales are running out of fuel

In today’s edition of Moneycontrol Pro Panorama: The metal play, Anand Rathi IPO gets off the block, decoding Digital Banks, Start-up Street, Rahul Dravid faces a tall order, Lex-speak and more

December 02, 2021 / 02:45 PM IST

Dear Reader,

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

Auto wholesale sales data for November poured cold water on expectations of a strong rebound in performance after the second wave of COVID-19. On the contrary, the sector continues to battle challenges on demand and supply fronts.

What’s most disappointing is that wholesale sales of cars and two-wheelers fell over a year ago and also compared to October. While management commentary blames the semiconductor shortage as one of the key reasons, concerns on a slowdown in demand are coming to haunt the industry.

Passenger vehicles and two-wheelers are facing a dent in demand at the entry- and mid-segment levels -- a feature that was visible in retail sales through the festive season. In fact, the Federation of Automotive Dealers Association had pointed out that it was the worst retail auto sales registered during a festive season, in a decade.


The weak demand can be attributed to various factors such as rural distress, impact of inflation on the purchasing power of urban customers, vehicle and fuel price hikes and also COVID-led uncertainties that are influencing customers to defer decisions to buy a vehicle. Maruti Suzuki announced today its decision to increase prices in January 2022. If others follow suit, it may affect demand further. However, demand for premium vehicles, particularly the utility vehicle segment, showed a spark; November wholesales of these vehicles improved led by Maruti and Tata Motors.

Even the medium and heavy commercial vehicles (CVs), which showed signs of sales improving in the past two months, dipped in November. Worse, overall CV volumes were lower than even March 2021 levels.

For auto manufacturers, there are challenges galore. Rising logistics costs, semiconductor shortage, and a new worry is the uncertainty over the impact of the Omicron variant of virus. If these were not enough, they are facing an existential question of coping with the shift to electric vehicles. The two-wheeler industry is seeing newcomers pose a challenge to incumbents scaling up volumes. The car industry may not be seeing that sort of disruption yet, but there’s little room for complacence.

Some interesting insights from our research team

Anand Rathi IPO – Which listed peers offer better value than this issue?

Why we recommend caution in the metal space, going ahead After a correction, is it the right time to buy?

What else are we reading today?

Digital Banks | Let a 100 flowers bloom, let a 100 banks contend

Start-up Street | Fintech start-ups must get disruptive with hiring strategies

Fertiliser shortfall may persist despite a record subsidy payout

Expressways are the highways to multi-sector development

Cricket | Rahul Dravid’s innings as India coach could be his toughest so far

Lex | World Stock Exchange: A pipe dream technology could make a reality(republished from FT for MC Pro subscribers)


Crypto Learn: What are Altcoins?

Picks from our Technical Analysts

SBICoal IndiaSAIL and Voltas (These are published every trading day before markets open)

Vatsala Kamat

Moneycontrol Pro

Vatsala Kamat
first published: Dec 2, 2021 02:45 pm
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