Marginal dip in two-wheeler, CV sales expected in coming months

While deep discounting due to the Bharat Stage (BS) III vehicles ban by Supreme Court led to a growth in two-wheeler and commercial vehicle (CV) sales in March, there is expected to be a marginal dip in sales in the coming months. Pre-buying due to the BS III deadline of March 31 pushed sales of two-wheeler and CV companies high in March, however there is expected to be a slow down in the month of April.

Automobile analysts Sneha Prashant and Abhishek Kumar Jain in a HDFC Securities report said, “We expect marginal dip in two-wheeler and CV sales in coming months owing to pre-buying in March. We believe that UV volumes could be subdued in the near term.”

The reason for this dip as a large majority of people and fleets buying vehicles brought it earlier due to the large discounts, there would be few buys in the following months. Besides this, the prices of BS-IV vehicles is significantly higher and this cost factor would dissuade people from purchasing immediately in April or May. The price of BS-IV vehicles can be priced higher by Rs 1,000 to Rs 7,000 for two-wheelers, for commercial vehicles it would be higher.

However, for two-wheelers companies there is the upcoming wedding season in April and May will help push their sales. As dealerships have almost finished their inventory, many will starting increasing their stock of two-wheelers once again in anticipation of good demand building up for the wedding season.

“Demand for April also should be good as dealers are sitting on lower inventory and they would like to increase their inventory level before marriage season demand kicks in,” said the report.
Companies with higher BS-IV two wheeler inventory such as Bajaj Auto will be the most to benefit from this.