Wholesales to grow on low base for all automobile segments: Motilal Oswal

Wholesale volumes in the automobile sector are estimated to grow at 14.4 per cent for two-wheelers on a low base, the report said

Wholesale volumes in the automobile sector are estimated to grow at 14.4 per cent for two-wheelers on a low base and 5.4 per cent for passenger vehicles due to year-end sales, Motilal Oswal Financial Services said on Tuesday.

However, commercial vehicle volumes are likely to decline by 2.8 per cent (LCV growth of 4.7 per cent but restricted by a decline of 11.6 per cent in M & HCVs).

At the same time, said the Motilal Oswal report, wholesale volumes for tractors are expected to grow by 38.4 per cent year-on-year on robust demand and lower base.

Discounts currently stand 50 per cent as compared to last year. Inventory is lower than normal for passenger vehicles and tractors, leaving headroom for higher inventory filling in the coming months.

Wholesales are expected to grow on a low base in December, catering to the spillover demand from the festive season and inventory refilling (for passenger vehicles and tractors).

Motilal Oswal said the two-wheeler inventory currently stands at 30 to 45 days. The passenger vehicles inventory while entering last week of December remains at minimal levels (10 to 20 days) with a waiting period of four to six weeks in fast-selling models.

M & HCVs are seeing strong demand from the infrastructure and construction segment on the back of resumed government spending on infrastructure whereas inquiries from haulage are better than last year.

Demand for tractors continues to remain strong with a growth in retails and supplies just meeting demand. Overall consumer sentiment has improved, but the market remains cautious fearing a second Covid-19 wave.