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Passenger cars brightest spot in auto industry on high festive demand: ReportNEW DELHI: Personal mobility, lack of public transport facility, festive purchases, some pent-up demand and rural momentum led to a surge in passenger cars demand.

According to a report by LKP Securities, passenger vehicles (PV) has been the brightest spot in the industry during festive season.

There was a strong demand for Maruti and Tata Motors. Even Hyundai is performing well, and has been able to solve the vendor issues. The worst hit due to vendor issues is M&M (both on the autos side as well as Tractors side). Foreign players like Honda, Renault, Skoda, Ford, VW, MG etc also were among the worst hit.

Personal mobility, lack of public transport facility, festive purchases, some pent-up demand and rural momentum led to a surge in the PV demand, the report said.

Maruti and Tata Motors dealers sounded very happy with no supply side constraints and a very high festive demand as they observed more than 10% growth in the retail demand over the last year.

Tata Motors dealers remain the most confident with strong enquiries and footfall conversion rates happening.

Within Arena, Alto and Wagon R are doing well, while Celerio showed a bit subdued sales. Within Nexa, except S-Cross all other models performed decently.

Increased demand was there for Alto and Wagon R which indicates down-trading owing to lower affordability stemming from job losses and salary cuts of customers during lockdown. Maximum competition is in the UV segment mainly from Hyundai and Kia, the report said.

For all the PVs too, the first time buyer category remained the highest and contributed 40%. Geographically too the demand was more or less skewed towards north and west. Rural markets grew at a higher rate than urban ones. All the models and variants of M&M are still facing supply side issues. Before the festivals, dealers were confident that this issue shall get sorted out. However, there was a small improvement in it, resulting in a lackluster season for M&M despite demand, the report said.

On two wheelers, the report said that demand was overall good in the country in the 32 days of the festival. However, the growth that was observed in the initial six months post the lockdown was opened seems to have tapered off a bit. Most of the dealers across the country had a decent festive period.

Certain pockets in rural Uttar Pradesh have seen a subdued season as they mentioned that sugarcane and wheat produce did not get the expected pricing, leading to lower income in farmers’ hands, hence lesser demand.

Demand in small cities and rural India was much better than urban or Tier-1 cities. Some Tier -1 and Tier -2 cities dealers also observed slight negative to flattish growth. In rural India, the growth was between 5-10%.

There has been a conspicuous down-trading in the two wheeler industry as entry level bikes are finding higher demand. Passion, CD Dawn, HF Deluxe and Splendor from Hero’s stable are high on demand. However, for Bajaj, Pulsar segment – its bread and butter, found good demand. Hero’s Xtreme 160R and X-Pulse are also great successes. Among the total buyers, first time buyers are the biggest contributors since public transport is not considered to be safe and offices have restarted, the report said.

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