A million cars and a million smiles light up India’s festive season | Autocar Professional

Eight new cars were sold every minute this festive season in India – the world’s third largest car market. A record 1.025 million cars and SUVs are estimated to have been retailed in the 90-day-period which started with Onam in Kerala and concluded with Bhai Dooj across the majority of the states.


In these three months, the vehicle makers have generated a turnover of over Rs 1.1 lakh crore, thereby making the auto industry a key contributor to the swelling GST collection for the government of India.

The Indian car market continues to scale new peaks. Not only are the volumes hitting a new high every month of this fiscal year, but the average ticket price is also moving up.

The growing economy, rising disposable income and younger population has meant that the market is maturing fast and the cars are getting safer and are high on tech. With improved semiconductor supplies this year, more Indians fulfilled their dream of owning a personal vehicle.

Shashank Srivastava, Senior Executive Officer, Sales and Marketing at Maruti Suzuki says – a longer festive period, the availability of semiconductor chips backed by strong production ramp up ensured that the industry broke new records and crossed one million deliveries for the first time ever.

“High production and execution of non-festive order books culminating into the festive season ensured strong deliveries during this year’s festive season. The sustained booking and enquiry numbers right from August also ensured that the numbers were strong. Maruti Suzuki on its part has been able to reduce its order backlog from over four lakh units a couple of quarters back to almost two lakh units doing better than the industry,” said Srivastava.

The festive season every year starts on August 17. But the number of festive days can vary from year to year, depending on whether or not there is an adhik mass or an extra month in the Hindu calendar year.

From the start of festive season in Kerala with Onam to Bhaidooj this year in November, the season was spread over a 90-day time frame – whereas the span of festive season last year was around 71 days. In 2023, due to adhik maas, the festivities were spread over a period of four months – from August to November.

This span of three to four months of extended festive season includes a period of pitru paksh or shraddh period which is considered an inauspicious time for discretionary purchase – like cars – wherein the vehicle makers usually build inventory.

Long waited period – Passe
Tarun Garg, COO of Hyundai Motor India says what differentiated this festive season over the last couple of years is that the cars are available for quicker deliveries to customers.

“Thanks to the improvement in semiconductor availability, there is adequate stock of vehicles at dealerships which is ensuring that the value seekers and customers who make an instinctive decision to buy on the spot during festivals are able to purchase a vehicle they could drive home in. The fresh bookings over the last few months have remained strong and new launches like Exter have also brought in new car buyers for us,” added Garg.

Between August 17 and the end of Navratri, the industry had registered a growth over 18 percent, retailing over 7 lakh units and an additional about 3.25 to 3.3 lakh units are estimated to have been sold between Dussehra and the end of season, taking the cumulative festive sale for the first time over a million units. The same last year was about 8.1 to 8.5 lakh units, indicating a growth of over 20-25 percent.

The sale this festive season is higher than the festive period of 2020, when there was a huge pent-up demand from the lockdown period of April to June, which got subsumed during festive period post Covid-19.

Hardeep Singh Brar – National Head Sales and Marketing at Kia India says for him the festive season is the thirteenth month for sales. Reflecting on the season this year, Brar said the customer sentiment has been extremely positive which has helped Kia report its fourth-highest sales performance in October.

“As far as the overall demand is concerned, we are exceedingly optimistic that the industry is poised to achieve its highest retail sales record by the end of this season, with 95 percent of the supply chain issues resolved already. Prior to the festive season we were doing about 20k+ retail which increased to about 24k+ (20 percent growth) in the festive period due to overwhelming demand for Seltos. We shall be close to this number in November too,” said Brar.

Rural markets join festive cheer
Even as the industry was scaling new peaks, the monsoon and distribution of rain was seen as the biggest risk. Despite deficit rainfall and poor spread, the hinterlands have warmed up this season.

For the market leader Maruti Suzuki, the rural growth was higher than the urban growth, due to its strong linkages in the hinterlands and deep reach. Maruti Suzuki grew its rural sales by 11 percent versus urban growth of 9 percent. For the market leader, now the share of rural sales accounts for 44 percent of its total sales.

For the overall market, the share of small towns and villages is fast approaching one-third mark, with 31 percent of total sales coming from rural areas in 2023.

All this growth has come despite a weak entry car segment, but revival of rural markets and growth in the two-wheeler segment are good indicators of how the entry segment revival is around the corner.

The entry car segment was severely impacted by price increases over the last few years, however Srivastava believes, “The prices have stabilised now, the income levels are improving, economy is back to normal, so one expects the disposable income to improve, which will help the entry car segment to come back.”

He believes that the growth rate in the economy is good and the inflation is stable, income levels are improving. “We can see revival in the two-wheeler segment, the revival in the entry segment will also happen,” added Srivastava.

Market Growth Exceeds Expectation
Already, production has seen a month-on-month correction. The stock levels naturally will witness a correction, but the bookings and inquiries post season will be important to deciphering how the market will end 2023. Yet the consensus appears to be that a strong festive season would drive the passenger vehicle market to grow by almost 7-9 percent to 4.13 million for 2023 calendar year, almost 300-400 basis points higher than the growth expectation of 5-6 percent, about 1 lakh units more than the expectation.

Brar says initially the industry was expected to grow at a pace of 5 percent, as there were a plethora of challenges from semiconductor shortage which is a critical part for making feature-rich and secure cars and geopolitical situations. However, with the industry posting record monthly sales since July, we think it will close the year with at least 8 percent growth.

Way forward
Garg agrees the growth is better than the expectation. “After growing by a strong double digit for two years, an 8 percent growth for 2023 is very healthy, while it is early to gauge the demand parameters for next year, the growth will continue, albeit in low single digit,” he added.

“Currently, the demand is high because of multiple industry launches which have peaked buyer interest,” feels Brar. On the way ahead, he is “cautiously optimistic” about the demand, post festive season, as the recovery trend this year has also been non-linear.

R C Bhargava, Chairman of Maruti Suzuki post Q2 earnings call too had said, there is a projection of market slowing to lower single digit. Clearly the honeymoon period of low inventory, long waiting period is over and the industry is getting into a unique phase of high base and low growth. The only solace is the economy continues to be amongst the fastest growing economies in the word, the inflation too is under control, it is down to the fundamentals of strong brand and products.

This feature was first published in Autocar Professional’s November 15, 2023 issue.

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