Rising fuel prices have accelerated demand for CNG vehicles in the country. Accordingly, the availability of CNG in more cities has supported this trend.

"Demand for CNG vehicles remains strong, benefiting from surging fuel prices and increased CNG penetration in newer cities," said Motilal Oswal Financial Services (MOFSL).

"Inventory in the system is 10-20 days."

According to MOFSL, the retail demand evolution has been a mixed bag since the lifting of the second lockdown from mid-June 2021.

It pointed out that demand has bounced back quicker for 'PVs, but 2Ws' have seen slower recovery.

Besides, 'CVs' are expected to see healthy recovery from October 2021, the outlook for tractors is cautious due to the very high base of last year.

"Demand for '2Ws' is recovering very slowly, primarily due to the higher impact of the second wave in the rural market as well as higher fuel prices."

"Moreover, with increasing noise around EVs, customers are holding back on their purchases. Inventory in the system stands at 45-50 days as OEMs hope for good recovery during the upcoming festive season."

Furthermore, the report cited that demand for PVs remains strong, but sales are hampered by supply chain constraints, leading to high waiting periods for some of the high-selling models.

"Inquiry levels are healthy and OEMs have a strong order book."