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BS-IV liquidation rush aids year end retail pickup
Our monthly retail series report based on the retail registration data available from Vahan (MoRTH) for March’20 covers 1,132 of 1,421 (~80%) regional transport offices (RTOs). Key observations for the month: a) Overall registrations in Mar’20 jumped 24% on the back of high incentives offered for BS-IV inventory liquidation (led by 2W’s and CV’s); b) PV registrations were down 10% YoY, while 2W registrations grew 29% YoY; c) CV segment too saw enhanced registrations of 30% YoY (Feb’20 was up 7% YoY) due to high discounts (>20%+), year-end depreciation related tax benefits; d) in other segments, improvement in retail sale was witnessed in ICE 3Ws and e-rickshaws (38% YoY / 18% YoY); e) tractor demand too grew modestly at 9% YoY; f) channel checks indicate increased registrations were correlated to attractive discounts, improvement in rural consumer sentiment prior to festive season onset (e.g. Ram Navami/Gudi Padwa); g) on a state-wise basis, states that are performing relatively better are ruraloriented states (refer to tables inside), e.g. Bihar, Uttar Pradesh etc. and h)on annual basis in FY20 retails declined 3% in which 3-W’s were the only positive segment (6% YoY growth) while 2-W’s declined 3% while PV’s dropped 5%.
* Our view: Despite countrywide lockdown on dispatches for the last 10 days of the month, registrations continued through the month and saw a jump in Mar’20 across consumer segments (except PVs). Post lockdown dealers had kept online sales channel open to convert interested buyers. The 2W/CV OEMs higher registration levels for March reflect: a) high incentives driven pre-buy, b) slight improvement in rural sentiment. On a state level, Uttar Pradesh, Bihar continued to drive growth (Refer Table 2), while Karnataka and Haryana display remained weakest amongst top eight states. Going forward, COVID-19 outbreak is likely to cause further weakness in consumer sentiment (albeit urban demand is likely to be much weaker than rural). We expect affordable mobility solutions (e.g. 2W’s) to be benefit from possible change in consumer behavior post COVID-19.
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