An unequal recovery in demand for new vehicles across market segments throws some light on the disproportionate economic impact the Covid-19 pandemic has had on various strata of Indian society.Sales of affordable motorcycles, which cost about ₹50,000, have been languishing since the onset of the pandemic and show little sign of recovery. At the other end of the spectrum, luxury cars costing ₹50 lakh and above have been flying off the shelves.Mercedes Benz India said its sales were back to pre-Covid levels with a 65% growth for January-June 2021 over the same period the previous year. Several of the company’s models are sold out for the year and there’s a waiting period of at least four weeks for all but one of its remaining models. Corporate executives and high-net worth individuals were “purchasing luxury or super-luxury cars without much hesitation – something they used to do one or two years ago,” Santosh Iyer, senior vice-president at Mercedes Benz India, told ET recently. “Corporate India has shown (some) of the best-ever results.”One the other hand, the typical two-wheeler buyer is not buying any asset, let alone a new vehicle, amid the fear of a third Covid wave, according to Vinkesh Gulati, president, Federation of Automobile Dealers Association. 84514011‘Vehicles a Discretionary Buy’Consumers have become cautious upon seeing the impact of the second wave, when treatment costs wiped out finances of the Indian middle-class. “It was the same story last year too. The entry level saw a slower recovery,” said Gulati. “Whether it is job losses, migrant workers returning or wiping out of savings due to sickness — all this has impacted this segment.”Vehicle registration data for June shows that two-wheeler sales were down 30% compared to June 2019. In comparison, car sales were down by 10% over the same period. June 2019 is taken as the baseline as that is the most recent comparable month before the onset of the pandemic. Even within different vehicle segments, recovery in sales of the more affordable models was slower. Consider this statistic — in FY21, sales of entry-level motorcycles declined by 13%, while that of other motorcycle segments declined by just 2%. Similarly, sales of small cars declined by about 8% on-year, whereas utility vehicle sales increased by 12%, despite the pandemic. “There is some hesitancy at the entry level to some extent in some markets,” Shailesh Chandra, president of the passenger vehicles business unit at Tata Motors, told ET in a recent interview. However, he said it was too early to conclude whether this will happen across the country or remain limited to a few pockets.There have been other factors at play here too. In the car space, there were few launches at the entry level as manufacturers focused on the higher-margin utility vehicle segment. Launches play a significant role in influencing purchase decisions in the automobile segment. “Vehicles remain a discretionary buy. During the first wave, supply chains were the constraint. The industry is cautious right now because we don’t know... even if we can produce more, if the demand remains muted, that would further complicate things,” said Deepak Jain, president of Automotive Component Manufacturers Association.
from Economic Times https://ift.tt/3exFvHY
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