Car sales in India are on track to reach new heights in September. The ongoing festive season and the introduction of new SUV models have fueled consumer demand, resulting in an estimated dispatch of around 365,000-370,000 units, a 3-4% growth compared to the previous year. It is worth mentioning that auto firms consider dispatches to dealers as sales.
Shashank Srivastava, senior executive officer of sales and marketing at Maruti Suzuki India, stated, “We expect September sales to be one of the highest ever for the industry, surpassing 360,000 units. While the growth percentage may not be significant due to the high base of September 2022, when sales stood at 355,000 units, the absolute volumes are expected to be high.”
Tarun Garg, chief operating officer at Hyundai Motor India, shared a similar sentiment, saying, “At Hyundai, we anticipate a 9% growth in September. The pace of fresh bookings has been strong, with the Exter contributing to the momentum. The industry as a whole is expected to grow by about 3% compared to last year, with a total of 365,000-368,000 units (including luxury cars).”
Furthermore, auto makers are preparing for October and November, which are expected to see increased dispatches due to the peak of the festive season. However, September retail sales are projected to lag behind wholesale figures as dealers stock up for the anticipated surge in retail demand starting in mid-October. By the end of September, cumulative stock at dealerships is expected to reach approximately 330,000 units, the highest level in over five years.
While the high stock levels may seem concerning, the underlying demand remains strong. The inventory levels, in terms of number of days, are well within a 30-day range, unlike in the previous fiscal year. However, dealers are facing challenges in obtaining higher working capital limits from banks. The sharp increase in the average selling price of models and the need to stock up for the peak season necessitates a larger working capital. Nikunj Sanghi, managing director at JS Four Wheels, a dealership for Mahindra and Mahindra and Hero MotoCorp, emphasized the difficulties in securing adequate working capital, stating that the requirement has tripled from the previous fiscal year. He also noted that few options are available for those with financial stress.
The Indian auto market has been experiencing consistent growth for the past 19 months. September will mark the third consecutive month with sales exceeding 350,000 units, resulting in a record quarterly sales figure of 1.08 million units. Moreover, this will be the first time ever that sales in the first half of the fiscal year will surpass the 2-million-unit mark.
If the current average run-rate is sustained, the Indian auto industry could achieve a record volume of 4.2 million units in FY24, representing a growth of 9% following a 26% growth in the previous fiscal year. Furthermore, the volumes are expected to grow by 16% compared to the flat growth witnessed over the past decade.
However, Srivastava cautioned that the industry should closely monitor the segment-wise construct of dealer inventory as it may be lopsided, with certain models experiencing long waiting periods while others are in excess supply.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
