The latest sales figures for November for passenger vehicles and various fuel categories are a lesson in not reading too much into ‘rebound’ theories. Yes, the economy is turning around, but it seems more like Pilgrim’s Progress.
The just-in car sales figures show that while there was growth in November by 9% with 2.86 lakh units being sold as compared to a year ago, sequentially from the previous month of October, there was a drop of 14% when 3.34 lakh units were sold.
The biggest manufacturer, Maruti Suzuki, actually reported a 2.4% decline year-on-year for November to 1,35,775 units. The situation may be worse as auto companies report figures as dispatches to dealers and not actual cars sold. Auto dealers have been warning that post-Diwali, sales are subdued and they are overstocked.
Dealer organisations have sent out an SoS to major automakers to cut production as it was resulting in losses at the retail end. Some of the ‘green shoots’ being seen in the sector were because of pent-up demand. Meanwhile, fuel sales—a bellwether indicator of how the economy is doing—have also been stagnating.
Diesel consumption dropped 7% in November from the year earlier, after we saw a rebound in October. State-run oil companies however reported a 5% increase in petrol sales, but analysts said people’s preference for personal vehicles to avoid overcrowded public transport was a generative factor.
Jet aviation fuel demand continued to remain weak too with sales 48% lower in November from the year-ago figure. This showed that international flights, and with that travel, hospitality and trade, have all remained restricted, and are still struggling to come out from the pandemic blues. In the short-term, these numbers show that the Diwali and festival spike has not been sustained.
In the long-term, the takeaway is that the pandemic is still alive and kicking, with many regions and cities experiencing a second or third wave of infection and economic lockdown. We need to understand that clawing our way back to normal economic functions is a long haul, and quick-fix solutions at best are wishful thinking.