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    Carmakers have something to celebrate as festive season begins with double digit growth in sales

    Synopsis

    Usually a good start of Ganesh Chaturthi and Onam paves way for a healthy festive season for the rest of the country.

    ET Spotlight
    Mumbai: The festive season has got off to a good start with the 15 days of Ganesh Chathurti and Onam recording strong growth of 15-20% over previous season. Car makers have sold close to 50,000 units in the states of Maharashtra and Kerala during the key festivities in August, which usually attracts higher numbers of bookings and deliveries. This is for the first time in three years that car makers have notched double digit growth in sales during the key festive season.

    Maharashtra and Kerala usually account for about 17% of the total sales for car makers, however in the month of August, the share of both the states increased to 22% of total retail sales of about 232000. Usually a good start of Ganesh Chaturthi and Onam paves way for a healthy festive season for the rest of the country.

    11 sep

    Shashank Srivastava, ED, sales and marketing at Maruti Suzuki says a straightforward comparison of retail sales data over last year will not be fair because of floods in Kerala last year and other economic factors had impacted sales adversely and hence the double digit growth in the Onam and Ganesh Chaturthi festival season should be seen in the perspective of depressed numbers of last year leading to a low base. “Nevertheless, the beginning of the festival season that kicks off from Kerala and then Maharashtra is encouraging and the industry has taken a collective sigh of relief. However, the continued uncertainty in the market due to Covid and the economic situation has made that sigh a little muted,” added Srivastava.

    Sustained demand has ensured that at an industry level inventory for passenger vehicles remained at about three weeks or 1.75 lakh units compared to 2.32 lakh despatches in August. However, the inventory position is set to be inflated in September, with capacities getting ramped up on one hand and due to the inauspicious shradh period, prospective buyers will either defer the booking. So there is a possibility that by the end of September the stock at dealers may increase to over five weeks.

    The industry is not out of the woods yet. The low base of last year and pent-up demand is reflecting in positive numbers. Also, the first five months sales average in FY-21 is at about 1.15 lakh due to lockdown versus 2.3 lakh per month in FY-20, so clearly there is pent-up demand and Covid-19 has also triggered the need for personal mobility.

    “Sales are still much lower than the first half of FY19, when demand was driven by fundamentals of the economy. At present, erring on the side of lack of supply will be unpardonable because once pent-up demand is satiated and festive excitement ends, it will come down to GDP growth, which is down by a significant double digit,” said a senior executive at the top three car maker, requesting anonymity.

    In the two wheeler segment, Maharashtra and Kerala account for 15% of total sales and both states registered a steep decline for five quarters. Hero MotoCorp registered healthy growth over the previous season, with bookings higher than deliveries, indicating stock running out fast at dealerships.

    August starting on a double digit paves way for a good season ahead for the industry.
    The Economic Times