A cracker of a Diwali came home early for the auto industry that reported bumper sales in October, holding out hope that the Covid-induced slowdown may be on the wane.
Hyundai and Hero Moto, India’s two top automakers, reported lifetime-high monthly volumes in wholesale deliveries to dealerships.
The passenger vehicles industry has been under severe pressure over the last two years and after an 18% fall in 2019-20, demand was weak even this year.
But demand has come back, largely led by the generally positive sentiments around Navaratri and Diwali. A section of analysts and industry players, however, said that weak sales during lockdown has resulted in pent-up demand, which is now playing out in the market.
Maruti, which accounts for nearly half the passenger vehicle market, recorded sales of over 1.6 lakh units in October,
growing 18%, on the back of strong demand for its wide portfolio of hatchbacks and entry-level cars. Maruti chairman RC Bhargava said that demand remained strong so far in the festive period, but warned that there was a need for cautious optimism when it came to predicting demand in the fourth quarter of the current financial year as well as 2021-22.
Hyundai has been going strong with products such as Venue and Creta SUVs, while Tata Motors too has been witnessing a strong resurgence of late.
“October sales performance has set a positive tone for the overall business environment and we are confident that Hyundai will continue to strongly contribute towards sustainable growth of the economy,” a top company executive said.
Festive offers and new models have been keeping the buyers excited and companies hope that this will keep the numbers ticking even beyond the festive period. Models such as Kia’s Sonet and Mahindra’s Thar have seen strong demand, while new ones that are about to hit the market are Hyundai’s i20 hatch and Maruti’s Celerio.
“The new Thar has set new records within just a month of its launch. For Mahindra, the festive season has started on a positive note… this augurs well for a robust festive demand which in turn will help the industry in the short term,” Veejay Nakra, CEO (Automotive Division) at M&M said.
But even as the industry has been registering growth for the past few weeks, companies fear that this may be short-lived and have been making a case for a tax cut. Auto body Siam has said that the government should reduce GST rates from 28% to 18% to bring in higher affordability.