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Auto registration and online activity for PVs, two-wheelers show upward trend

Auto registration and online activity for PVs, two-wheelers show upward trend

Auto registration and online activity for PVs, two-wheelers show upward trend
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By Ankit Gohel  Jun 11, 2020 6:29 AM IST (Updated)

As India comes out of the coronavirus-forced lockdown, the automobile sector in the country could be looking at recovery in demand for passenger vehicles (PV) and two-wheelers. The auto registration data and online activity suggest encouraging trends that may cheer automobile companies.

As India comes out of the coronavirus-forced lockdown, the automobile sector in the country could be looking at recovery in demand for passenger vehicles (PV) and two-wheelers. The auto registration data and online activity suggest encouraging trends that may cheer automobile companies.

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According to a report by Jefferies, passenger vehicle and two-wheeler registrations in the week ending June 6 recovered to 35-40 percent of the respective January-February levels from 25 percent in the week-ending May 30.
Tractor registrations picked up even faster with last week registrations at 53 percent of January-February numbers, versus 33 percent the week before, and were down just 9 percent year-on-year.
However, trucks are yet to show any signs of improvement.
Further, web activity is encouraging with Google search trends back to January-February level for PVs and even higher for 2Ws, indicating a rebound in consumer interest. Google search activity for top car original equipment manufacturers (OEM) is now at 96 percent of the January-February level, while that for key two-wheeler portals is even higher. Both were about 40 percent at the bottom, according to the Jefferies report.
“There would be an element of pent-up demand and potential customers would be now more inclined to go online than offline. It, therefore, remains to be seen whether this flows into retail demand, but the bounce back is encouraging,” the report said.
Meanwhile, app activity for taxi aggregators remains low, suggesting reluctance for shared mobility.
The automobile plants and supply chains are ramping up although utilization levels still remain low. Production challenges have eased in the last 2-3 weeks as most suppliers have received regulatory approvals to commence operations. Low availability of temporary workforce does not seem to be a big issue at the moment due to low utilization, the report noted.
“About 65-75 percent of the dealerships have already started operations. Financing environment has also started to ease with OEMs tying up with lending companies for high loan-to-value and relaxed initial monthly payments,” it added.
However, for the commercial vehicle space, recovery is unlikely to be seen in the near term.
A combination of low activity levels and BS-VI-related price hikes would result in new truck buying picking up only in H2FY21, brokerage CLSA said in a note.
E-way bill generation (proxy for road transport) declined 53 percent YoY in May 2020, versus an 83 percent YoY decline in April. May witnessed week-on-week improvement in e-way bill generation throughout the month while the first week of June indicates a pause, down 8 percent WoW, CLSA said.
CLSA forecasts truck sales to decline 15 percent in FY21 (-47 percent in FY20) and recover by 25 percent in FY22.
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