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Saturday, October 31, 2020

Auto sales in fast lane on rising rural demand, first-time buyers

With sales of 50,313 units in the domestic market, Hyundai Motors, too, announced a 23.6 per cent jump in sales over the corresponding month of last year.

By: ENS Economic Bureau | New Delhi | Updated: October 2, 2020 10:44:38 am
Industry insiders say the rise in wholesale numbers for September is also on account of the fact that dealers are looking to stock-up in anticipation of festive season demand.

Driven by demand for small cars from first-time buyers, rural consumers and additional purchase from families looking to avoid public transportation amid the Covid-19 pandemic, the Indian automobile industry continued to show improvement in production and dispatch numbers in September. Maruti Suzuki India announced a 33.9 per cent jump in its passenger vehicle sales in the domestic market last month. The company sold 1,47,912 units, which is the highest monthly sales in 24 months, i.e. since September 2018.

With sales of 50,313 units in the domestic market, Hyundai Motors, too, announced a 23.6 per cent jump in sales over the corresponding month of last year.

Among other players, while Mahindra & Mahindra announced a 3.5 per cent rise in domestic PV sales in September at 14,857 units, Honda Cars India registered monthly domestic sales of 10,199 units last month, a growth of 9.7 per cent over sales of 9,301 units in September 2019. Toyota Kirloskar Motors witnessed a 20 per cent decline in sales at 8,116 units last month, but the company continued to show rise in month-on-month sales.

Even in the two-wheeler segment TVS Motor registered a growth of 3.8 per cent with sales of 327,692 units in September. Hero MotoCorp announced sale of 7,15,718 units and registered growth of 16.9 per cent over the same quarter of last year.

Industry insiders say the rise in wholesale numbers for September is also on account of the fact that dealers are looking to stock-up in anticipation of festive season demand, which should pick up about mid-October. The companies also witnessed near normalisation of production, with lockdown restrictions being relaxed.

A look into sales data over the last six months shows that while April saw nil sales by automobile manufacturers on account of a complete lockdown, slow revival was seen in May and June, following some relaxations in lockdown curbs. However, the recovery has been strong in July, August, and September as most of the manufacturers witnessed y-o-y growth in sales. A closer look into the last month’s sales of MSIL shows the mini segment (Alto& S-Presso) and compact segment (WagonR, Swift, Celerio, Ignis, Baleno and Dzire) accounted for 75 per cent of total units sold. By comparison, the two segments accounted for 70 per cent of its sales in September 2019. While sales of mini segment jumped 35.7 per cent to 27,246 units, sales in compact segment rose 47 per cent to 84,213 units.

“While there is demand from first-time buyers and from rural areas, we have also seen that additional car purchase has gone up because people want to avoid public transportation. People are moving from conspicuous consumption to conscious consumption and since it is driven by the utility factor, people are going for smaller cars,” said Shashank Srivastava, ED marketing and sales at MSIL.

While automobile manufacturers have seen fast recovery in production and sales over the last three months and they are hoping that the demand would be good in the festive season, industry insiders are cautious when it comes to future expectation as they feel that car sales have a strong correlation with economic growth and rise in per capita income.

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