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Retail demand slows down amidst covid resurgence

In continuation to our monthly series, we are monitoring mobility and retail demand trends as we believe both these data sets have a lead-lag effect. For AprMay’21, the data makes more sense on MoM basis due to negligible base in FY20. Key takeaways for Apr’21: a) Global mobility data trends remain on the mend with a few regions being more effected (e.g. UK, Italy, Japan – charts 1-4); however, India mobility data nosedived led by the states (e.g. Maharashtra, Delhi) which went under lockdown due to covid; b)

Overall, Northern and Western states were most impacted (40-45% decline in mobility data), while drop in Eastern and Southern states was ~30% (charts 7-10); and c) On domestic retail demand trends, PV segment declined 24% MoM while 2Ws fell 27% MoM due to continued weakness in entry level demand, which was potentially worsened due to covid.

Key observations

* India’s state-wise retail analysis indicates retail sales have decreased across commercial segment (CV) categories on MoM basis (down ~22%) as economic activity moderated and freight rates declined. A lowering of fuel prices, well incentivised scrappage policy could boost the sentiments of fleet operators for the near to medium term.

Registrations for tractors too slumped (by ~44%); improvement in rural cashflow (aided by both superior winter harvest and rising usage in infrastructure-related haulage activities) is likely to aid demand. Apr’21 retail registrations were also impacted due to limited operations at RTOs from the lockdowns in various states (tables 5-9). Kerala was the only state (potentially due to election) which recorded MoM growth across PV/2Ws (~19.5%/2.5% respectively)

* In India, workplace mobility data after witnessing many ebbs and flows of improvements and stagnation between May-Dec’20, witnessed consistent improvement (up to Mar’21) across most regions. However, as covid cases across regions started to rise, mobility has nosedived in the most impacted states by ~50%. Apr’21 data reflects all regions are almost (30-40% down YoY) with North and West India being worst hit. Overall, traffic rebound on an aggregate basis saw degradation of 37% in workplace mobility, while transit mobility saw decline of 35% YoY with West being the most affected area (charts 7-10).

* Few observations on OEM-wise market share trends: 1) Market share gains (YoY basis) by Tata Motors (130bps YoY) and Toyota (90bps) at the expense of Maruti Suzuki (240bps), and Hyundai(130bps) likely due to traction from various new launches; 2) In 2W space, Royal Enfield / Bajaj Auto have made marginal gains in market share (up 70bps / 20 bps YoY respectively), while HMSI / Hero Motorcorp lost 50bps / 120bps respectively; and 3) tractor segment also witnessed Escorts / John Deere make gains (up 100bps / 50bps respectively) (tables 10-17)

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