New Delhi: The passenger vehicle (PV) makers are expected to dispatch the highest-ever number of units to the dealers during the festive season this year. The promising season began with Onam and Raksha Bandhan in August and will go on till Diwali in November.
“Festive season in the country usually accounts for about 23%-26% of annual sales volumes of the auto industry. While the industry is projected to clock about 4.1 million (41 lakh) unit sales this fiscal year, the festive season could contribute about 1 million (10 lakh) units,” Shashank Srivatava, Senior Executive Officer (Marketing & Sales), Maruti Suzuki, said.
Earlier, the highest ever festive season dispatches were in 2020-21 at 9.34 lakh units. However, it may also be attributed to the pent up demand as during the first half of 2021 when there was very little retail sales because of the COVID shutdown.
In response to a strong demand in a run-up to the festive season, the industry dispatched the highest-ever number of vehicles to the dealers for any month during August. The network stock in the industry is estimated at 311,000 units, which is about 30 days of inventory.
“Such high levels of stock were seen four years ago, but the situation is not worrisome considering the increased average volumes in the industry,” Srivastava noted.
He said that the highest wholesales for the month may be attributed to the momentum built up with a positive demand on account of the beginning of the festive season with Onam. With this, a host of new model launches in the fast growing SUV category also attracted customers.
He added that the correlation between economic growth and the growth of the auto industry is quite high. Production has significantly improved. “The correlation between GDP per capita and the growth of the automotive industry has been pegged at its highest ever of 0.983. The July-September period is likely to be the first quarter with no or very little semiconductor constraints.”
The pending bookings were pretty high and they are now coming down after increased production and the better availability of some of those pending models. So, there is also an element of pent up demand.
Rural sentiment
The industry has seen a good agricultural output. The Kharif sowing also has been quite normal. However, August has been much drier and the monsoon deficit was 8%. Fortunately, the deficit was only during the last two weeks of the month and the rainfall till August and kharif sowing were normal. In that sense, it has not affected the sowing pattern much.
Maruti expects the rural growth to be higher than the urban growth, however it is “very closely watching the situation to see whether it would have any long term effect on the overall inflation of food, and also on the sentiments of rural.” It expects a flat growth in the sales of small cars.
“The entry level models including Alto and S-Presso do well during the festive season, because the effect of the festival fervour in the smaller places seems to be higher than that in the larger cities and the percentage of sale of hatchbacks in the former places is higher,” Srivastava said.
Maruti Suzuki, which has now become the No 1 SUV maker, reported a 45% drop in dispatch of its mini cars (Alto, S-Presso) at 12,209 units in August this year, compared to 22,162 units in the corresponding month of 2022.
“I would expect an uptick in small car sales from the current levels, but it may not be there for the whole year. Our projection is that it would be about 30.5% of the industry. Last year it was about 34%,” Srivastava said.
The wholesale for its Ciaz model was also down by 44% to 849 units, as against 1,516 units in August last year.
“We have had some issues with the production of Ciaz. However, this year sedan as a segment has come down from about 10.5% last year to 3% in the April-August period. For August, it was even lower,” he said.
“Within the segment, the entry-level category is the one which is actually doing well. Last year, almost out of the four lakh vehicles which were sold in the sedan segment, three lakh were almost entry-sedans. The mid-size sedan category has been declining, and so for the Ciaz. However, we are trying to ramp up its availability so that at least we come to the volumes at 1200 to 1500 units,” the company added.
Maruti said that for the current fiscal year its exports projection still remains higher than last year. Last year it shipped almost 2,59,500 units.
