As the festive season kicks off in India, automakers are welcoming a rise in demand for passenger vehicles across the country as sales picked up in the month of October for most manufacturers.
The ten-day period of Navratri, Dusshera and Durga Puja saw automakers post record sales figures compared to the same period last month.
Factors like increased demand for personal transport due to the pandemic, labour availability, resurgence of a stable sales network, festive season offers and launch of new cars in the market are some of the reasons the auto sector has shown signs of life after several months.
Despite positive numbers, retail figures have still been dismal but we’ll talk more about that later.
Some of the top car manufacturers like Maruti, Hyundai and Tata posted record year-on-year (YoY) increase in sales in the passenger vehicles (PV) segment.
Just so you know, these figures are factory door dispatches and not the actual number of cars sold via dealerships.
In October this year, Maruti managed to sell 1,63,600 units as compared to 1,39,121 units in October 2019. This is an 18 percent YoY growth for Indias largest car brand.
The sale of Maruti’s mini-cars like Alto and S-Presso dropped compared to the same time last year but it made up in the compact cars segment like WagonR, Celerio, Baleno and Dzire with 26.6 percent increase in the segment.
Utility vehicles like Ertiga, S-Cross and Brezza also rose in October by 9.9 percent.
Hyundai also performed exceptionally with a 13 percent growth in its PV segment. Cars like the Creta, Nios, Venue, Auro and Verna were ace performers.
“The October month sales performance has set a positive tone for overall business environment and we are confident that Hyundai will continue to strongly contribute towards sustainable growth of economy, community and all its stakeholders.”Tarun Garg, Director-Sales, Marketing and Service, HMIL
Tata Motors registered their highest growth in sales in October this year with a 79 percent increase in PV sales. The Indian auto giant sold 23,617 cars in the domestic market as compared to 13,169 units sold in October 2019.
Kia Motors, which has seen a string of successful launches since its debut in India back in August 2019, posted a 64 percent growth in the month of October this year. Riding high on the success of its SUV, the Kia Seltos, and the recently launched sub-compact SUV, the Kia Sonet, the South-Korean carmaker has been winning the hearts of Indian customers.
Other automobile manufacturers like Mahindra & Mahindra, Honda, Toyota, Ford and MG posted positive sales YoY figures for October. All are optimistic that this trend is will continue for the next couple of months.
“There is an increase in demand for personal transport now because public transport hasn’t fully opened up in most metros, with many choosing to use their own cars or bikes. This can be seen in the rising sales numbers of small cars as well as better demand in the used-car market.”Roshun Povaiah, Auto & Tech Consultant
Some Still Struggling
Despite an uptick by some carmakers, a few have struggled to post positive numbers.
Brands like Nissan, Renault, Volkswagen and Fiat have had a dismal October with negative sales in the PV segment.
Japanese automobile maker Nissan has been the worst performer of the lot with a 38 percent YoY drop in its PV sales numbers. German brand Volkswagen also struggled with a 36 percent drop.
In relative terms, brands like Renault and Fiat, despite posting negative sales figures for October, have done much better with a drop of -4 and -3 percent respectively.
The Bigger Picture
The rise in the number of PV sales recorded by multiple car brands in India doesn’t necessarily mean that people are buying more cars.
As per an Express Drives report, there has been a 12 percent dip in retail PV sales in October because of delay in Diwali this year. The report also says that the first 15 days of October were considered inauspicious to buy new cars which is another reason for the dip.
“There are two reasons for passenger vehicle sales picking up in October. One is the pent-up demand from the lockdown period playing out and the second is anticipation of higher festive season sales. These numbers, though, are dispatch numbers from factories to dealerships reported by SIAM and not indicative of actual sales from the showroom. However, there could be a flipside if retail sales don’t pick up, where dealers will be stuck with excess inventory, leading to year-end discounts in December.”Roshun Povaiah, Auto & Tech Consultant
So if you are looking to buy a car it is recommended that you wait till the end of the year as brands will be looking to clear the year’s stock by providing attractive discounts on some of their models.
Will the Growth Sustain?
It’s debatable whether the growth that we have witnessed in October will sustain in the long run. A lot of factors will decide how the automobile industry will perform post the festive season.
RC Bhargava, chairman, Maruti Suzuki India Limited firmly believes that sales will remain robust in November and December, however, there is a possibility that automakers will face a slump period in the starting of 2021 due to COVID-19 uncertainties and the general economic slowdown.
“For this uptick in sales to continue, there has to be strong economic factors backing it. For the moment, the reopening of many businesses post lockdown and some restoration of financial stability among the working classes has led to car-makers anticipating higher demand and hence pushing dispatches. This strategy could be short-lived if retail sales as reported by FADA from vehicle registration data does not pick up.”Roshun Povaiah, Auto & Tech Consultant