Shares of eight auto companies advanced after automobile registrations witnessed positive year-on-year (YoY) growth in December 2020.
The Nifty Auto index rose 1% to 9,839.05 while the benchmark Nifty 50 index added 0.64% to 14,439.
Tata Motors (up 3.89%), Ashok Leyland (up 1.82%), Maruti Suzuki (up 1.69%), Bharat Forge (up 1.38%), TVS Motor Company (up 0.97%), Hero MotoCorp (up 0.87%), Mahindra & Mahindra (up 0.82%) and Bajaj Auto (up 0.81%) advanced.
The Federation of Automobile Dealers Associations (FADA), apex national body representing automobile dealers in India, said that total vehicle registrations in December 2020 rose 11.01% to 18,44,143 units from 16,61,245 units in December 2019.
Tractor registrations stood at 69,105 units (up 35.49% YoY), the registrations of passenger vehicles stood at 2,71,249 vehicles (up 23.99% YoY) and two-wheeler vehicle registrations were at 14,24,620 vehicles (up 11.88% YoY) in December 2020.
Concurrently, three-wheeler vehicle registrations stood at 27,715 vehicles (down 52.75% YoY) while commercial vehicle registrations were at 51,454 vehicles (down 13.52% YoY) during the period under review.
Commenting on how December 2020 performed, FADA President, Vinkesh Gulati said, Automobile registrations for the first time witnessed YoY growth in this Financial Year by growing 11% in the month of December. A good crop season, better offers in 2W segment, new launches both in PV as well as 2W and a fear of price increase in the month of January kept the demand going.
Supply side issues in passenger vehicles continued for the 2nd straight month thus making waiting period as high as 8 months in select OEM vehicles.
The CV segment continues to see demand pressure even though on YoY basis the segment fell by 13.5% due to lower base. Increased intra-city goods movement continued to help SCV's outperform M&HCV segment as axle load norms, increased fuel & vehicle cost and higher freight rates continued to play spoilsport.
Tractor continues to outshine supply for 6 straight months further confirming the fact that Bharat carries on to lead India's economic recovery.
While December saw good spill over demand continuing from festive season and pre-buying due to price hike announcement, demand for vehicles in January looks to be bleak. PV may witness growth if demand supply mismatch is resolved.
With recent hikes announced by all OEMs, FADA expects a temporary blip in demand as customers will take time to absorb the same.
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