India’s auto sales speed up in the festive season

India’s auto sector was navigating choppy waters much before the Covid-19 pandemic struck the world. The situation deteriorated further with the strict implementation of an extended lockdown. Post June, as the economy started opening up, the movement in auto sector was quite somber. However, in the pre-festive months, major auto players spruced up their digital presence and launched new products attracting better consumer response.

The sector had high expectations from the festive month. According to Bloomberg Quint, analysts expected year-on-year auto wholesales to grow, abetted by inventory restocking to cater to the festive demand. The demand for two-wheelers and passenger cars was predicted to remain inclined towards rural and semi-urban markets.

To meet the improving demand, manufacturers ramped up vehicle production in anticipation and as the October sales report suggests, auto sales witnesses a good spike. Most industry players saw a good jump in wholesale dispatches, and many broke their previous records.

Speaking with BusinessLine, Gaurav Vangaal, Associate Director at IHS Markit said

“We were expecting substantial numbers during the festival season. The pent-up demand and product launches, with stabilized supply chains, have paved the way for growth,”

Vangaal further added that for certain models the demand surpassed production capabilities of manufacturers and suppliers. Cars including Hyundai Creta, Kia Sonet and Tata Altroz are leading the way. The sales of Tata Motors rose by 79%, while the sales for Kia Motors surged by 64%. Maruti Suzuki India sales grew by 18% as analysts pointed out that some of their models were in high demand. Hyundai Motor India registered highest-ever monthly sales with a growth of 13%.

Sales rose handsomely for the two-wheeler segment as well. Hero MotoCorp too reported record sales by selling over 8 lakh units and sales growth by 35% in October. Bajaj two-wheeler sales rose by 18%, while TVS Motor Company sales increased by 22%.

While October has been an excellent month for the auto sector, the festive season will end mid-November, so the question that the industry players seek the answer to is whether the trend will continue towards the end of November and in December.

Vinkesh Gulati, the president of Federation of the Automobile Dealers Associations, while speaking with BusinessLine, was doubtful of the sales growth trend to continue beyond the festive season due to waning consumer demand. However, he expects companies to roll out special discounts and offers towards the year end (in December) to lure customers for the leftover vehicles. Vangal, on the other hand expects the industry to regain the volumes in the beginning of the new year.

Only time will tell what the industry’s future will look like but for now, after having a bad 2019 and worse first half of the cursed year, 2020, auto companies are busy rejoicing the numbers. In comparison to last year retail sales rose by more than 25% in October 2020, so they have valid reasons to celebrate. Moreover, with a successful festive season, consumer sentiment is likely be get better in the coming months propelling the country and the sector towards a much-needed recovery.