Resurgent Covid to heavily dent 2W sales: MOFSL

Source :IANS
Author :IANS
Last Updated: Wed, Apr 21st, 2021, 12:58:07hrs
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Mumbai: Resurgence of Covid-19 cases is expected to drag the two-wheeler sectors' off-take lower by 30-50 per cent in April, Motilal Oswal Financial Services Ltd (MOFSL) said in a report.

"This is despite the mini festival seasons across the country and the rationale of drop in sales volume is attributed to the onset of the second wave of Covid-19," the report said.

"Smaller cities are seeing the impact of the second wave (unlike the first wave) - cases reported in the second week of April 2021 surpassed the peak of September 2020. April 2021 MTD saw significant decline in demand in 2W retails."

According to the report, if 2W demand fails to recover amid the mini festive and wedding season, than the recovery may be deferred up to October 2021.

"Dealers commenced Apr'21 with high inventory owing to the year-end push and high sales expectations from the festive season (Navratri, Gudi Padwa, etc.) and wedding season (northern and central India) and rural demand from the Rabi harvest."

However, sales have come out to be much lower.

As per the report, the financial services firm interacted with 2W dealers to gauge the demand and impact of the second wave on 2W sales, especially considering the mini festive seasons in many parts of the country as well as the wedding season.

"Expected 2W demand recovery during this mini festive or wedding season is yet to play out and is much lower than normal."

"Inventory at Hero (45-60 days), Bajaj (35-50 days), and TVS (30-40 days) was manageable at the start of the month, with a supporting number of inquiries and bookings."

Nonetheless, dealers saw a significant increase in cancellations with the rise in Covid cases.

"Maharashtra dealers on Gudi Padwa posted just 50 per cent of expected sales. UP retails were also impacted by the ongoing Panchayat elections (till 29th April)."

Furthermore, dealers cited that after the first lockdown, sales were driven by pent-up demand on account of the wedding season, rabi harvest, and non-availability of public transport.

"Demand was further supported by cash in the market as well as a very low number of cases. However, people have lesser savings amid the second wave as a consequence of slow economic activity in FY21, minimal cash inflow from migrant relatives, and high medical bills."

"Therefore, at the current rate of increase in Covid cases, recovery is expected to be more back-ended."
 

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