Festive stocking pushes up passenger vehicle sales in September

Vehicle manufacturers had increased inventory amid expectation that retail sales would pick up during festivals
Wholesale numbers of cars and utility vehicles rebounded in August due to pent-up demand and the onset of the festive season.

Passenger vehicle wholesales rose 26.5 per cent year-on-year to 2,72,027 units in September, as demand for compact cars and entry-level sport utility vehicles (SUVs) continued to rise in rural, semi-urban, and some urban markets, according to data released by the Society of Indian Automobile Manufacturers (Siam) on Friday.

However, Siam President Kenichi Ayukawa said even though the industry expected a boost in demand during the festive season, a clear picture of whether there has been an actual recovery will emerge only after the festive season. “Need to see what happens after the festive season. We are hoping for a sustained demand going ahead,” Ayukawa, also the managing director and chief executive officer of Maruti Suzuki, said.

Companies and dealers are building up stocks ahead of the festive season — the period beginning September and ending December that many Indians consider auspicious for purchases of consumer durables including cars and bikes.

Vehicle manufacturers had increased inventory amid expectation that retail sales would pick up during festivals. Dispatches of utility vehicles grew 24.5 per cent year-on-year to 96,633 units. Factory dispatches of passenger cars during the period rose 28.9 per cent to 1,63,981 units, as companies such as Maruti Suzuki India, Hyundai Motor India, and Kia Motors India increased wholesales of their respective SUVs to meet rising demand.

The growth is also the result of a low base in the corresponding period a year ago, when automakers had seen demand decline because of economic slowdown and increase in vehicle prices due to change in emission and safety norms.

Normal monsoon rain is one more factor that should stimulate rural demand.

“In the September quarter some segments have shown signs of recovery. Passenger vehicles and two-wheelers are positive, although on a very low base of previous year. We are expecting good demand in the festive season starting Monday. Auto loan interest rates are below 8 per cent, the lowest in a decade, and that should encourage customers to buy new vehicles,” Ayukawa said.

In the two-wheeler segment, scooter sales rose a marginal 0.08 per cent to 55,66,205 units while that of motorcycles grew 17.3 per cent to 12,24,117 units, as demand for entry- and executive-segment motorcycles recovered in the rural and semi-urban markets. Total two-wheeler sales jumped 11.6 per cent to 18,49,546 units.

Sales of two-wheelers have recovered faster compared to the other segments due to quicker demand revival in rural and semi-urban areas. A good summer harvest, favourable monsoon, and a relatively slower spread of Covid-19 infection aided demand recovery in rural markets. Siam did not provide wholesale dispatches data for commercial vehicles for September.

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