The demand for passenger and commercial vehicles moderated in October while the demand of two wheelers and tractors showed positive momentum, highlighted a report by Motilal Oswal.
The report noted that the two-wheeler sales performed relatively better, with growth during the festive season projected at around 4-5 per cent year-on-year.
However, this increase is somewhat restricted due to a high comparison base from last year. The inventory levels for two-wheelers and passenger vehicles remain high, making Diwali a critical period to assess how much of this stock can be cleared.
The report said, "PVs may see a fall in the festive season vs. last year. Inventory levels are currently high for both 2Ws and PVs, making Diwali sales a critical period to gauge inventory clearance."
Meanwhile, rural sentiment has seen a lift, partly thanks to a better monsoon, which could further aid demand, though its sustainability beyond the festive period remains uncertain.
Retail sales during the Navratri festival registered mid- to high-single-digit growth across various regions, although rural areas saw more subdued sales. Expectations are that rural demand may pick up around Diwali.
On the other hand, the demand for commercial vehicles continued to display weakness, even during the festive period, with volumes likely to see a year-on-year decline of about 5 per cent.
However, the situation has slightly improved compared to the previous month, with increased fleet utilization levels observed in most regions.
It added, "Weakness in CV demand persisted even during the festival, and we expect volumes to decline approx. 5 per cent YoY. However, the situation still seems better than last month as we noted improvement in fleet utilization levels in most of the regions".
Overall, the report indicated mixed sentiment across vehicle categories, with two-wheelers and tractors showing resilience, while passenger and commercial vehicles face a more challenging environment as the industry heads into the critical Diwali season. (ANI)
