India witnessed an unprecedented surge in car and SUV sales during the 90-day festive season, marking a historic milestone with over 1.03 million units retailed. The festivities, commencing with Onam in Kerala in August and concluding with Bhai Dooj across the majority of states, contributed significantly to the Indian automotive market. This surge is expected to generate a turnover of more than Rs 1.1 lakh crore, making a substantial impact on the country’s GST collection.
A Maturing Market: Rising Volumes and Average Ticket Prices
The Indian car market is reaching new heights, not only in terms of volume but also in average ticket prices. The continuous growth can be attributed to a robust economy, increasing disposable income, and a younger population. These factors have led to a maturation of the market, with cars becoming safer and technologically advanced.
Between August 17 and the end of Navratri, the industry witnessed a remarkable growth of over 18%, retailing over 7 lakh units. An additional 3.25 to 3.3 lakh units were estimated to be sold between Dussehra and the end of the festive season, pushing the cumulative festive sales over a million units for the first time. Compared to the previous year, this indicates a growth of 20-25%.
Reducing Wait Times and Adequate Stock: Key Contributors to Success
Shashank Srivastava, Senior Executive Officer, Sales, and Marketing at Maruti Suzuki, attributes the success to a longer festive period and the availability of semiconductor chips, backed by a strong production ramp-up. He highlights that Maruti Suzuki has managed to reduce its order backlog significantly, outperforming the industry. Adequate stock at dealerships was a crucial factor differentiating this festive season, ensuring that value-seeking customers could make on-the-spot decisions during the festivals.
Tarun Garg, COO of Hyundai Motor India, echoes this sentiment, emphasizing the availability of sufficient vehicle stock at dealerships. Garg points out that this allowed even instinctive buyers to make purchases during the festivals. New launches, like the Exter, contributed to attracting new car buyers.
Hardeep Singh Brar, National Head of Sales & Marketing at Kia India, notes that positive customer sentiment played a vital role in Kia’s fourth-highest sales performance in October. He anticipates that the industry is poised to achieve its highest retail sales record by the end of the season, with supply chain issues mostly resolved.
Rural Markets Driving Growth
Maruti Suzuki experienced higher growth in rural areas compared to urban areas, with rural sales growing by 11% versus urban growth of 9%. Rural sales now account for 44% of Maruti Suzuki’s total sales. Overall, small towns and villages contributed 31% of total sales in 2023. This growth occurred despite challenges in the entry-level car segment, impacted by price increases in recent years.
Srivastava believes that with stabilized prices, improving income levels, and a recovering economy, the entry-level car segment is expected to witness a revival. He draws parallels with the revival in the two-wheeler segment, expressing optimism for a similar trend in entry-level cars.
Outlook and Future Growth
While production has seen a month-on-month correction, the consensus is that a strong festive season will drive the passenger vehicle market to grow by almost 7-9% to 4.13 million units for the 2023 calendar year. This projection is about 1 lakh units more than initially expected.
Kia India’s Brar, initially expecting a 5% growth rate, now believes the industry will close the year with at least 8% growth. He emphasizes that despite challenges such as semiconductor shortages, the industry has posted record monthly sales since July.
Conclusion: A Unique Phase of High Base and Low Growth
As the market transitions from a honeymoon period of low inventory and long waiting periods, it enters a unique phase of high base and low growth. However, the fundamentals of a strong economy, controlled inflation, and the appeal of robust brands and products provide solace. The article provides insights into the factors driving the record-breaking festive season sales and the optimistic outlook for the Indian automotive market.
In conclusion, the extraordinary sales figures witnessed during this festive season signify not just a momentary surge but a reflection of the maturing Indian automotive market. With rural markets playing a significant role, the industry’s resilience against challenges like semiconductor shortages indicates a robust future. The article delves into the specifics of this success, attributing it to a combination of extended festive periods, reduced waiting times, and the strategic availability of stock. As India’s car market continues to evolve, the article paints a picture of sustained growth and heightened consumer optimism.
Frequently Asked Questions
1. What contributed to the record-breaking festive season in car sales?
The record-breaking festive season in car sales was influenced by factors such as an extended festive period, strong production, and the availability of semiconductor chips. These elements ensured a significant increase in deliveries, surpassing one million units for the first time.
2. How did manufacturers reduce waiting times for customers?
Manufacturers, including Maruti Suzuki, attribute the reduction in waiting times to a longer festive period, the availability of semiconductor chips, and a robust production ramp-up. Adequate stock at dealerships played a crucial role, allowing customers to make on-the-spot decisions during festivals.
3. What role did rural markets play in the festive season sales?
Rural markets played a significant role in the festive season sales, particularly for Maruti Suzuki. The carmaker experienced higher growth in rural areas (11%) compared to urban areas (9%), with rural sales now constituting 44% of its total sales.
4. Were there challenges in the entry-level car segment, and how are they expected to evolve?
Yes, the entry-level car segment faced challenges, mainly impacted by price increases over recent years. However, industry experts believe that with stabilized prices, improving income levels, and a recovering economy, there is optimism for a revival in the entry-level car segment.
5. How did Kia India address supply chain issues during the festive season?
Kia India reported that about 95% of supply chain issues were resolved before the festive season. This resolution, combined with positive customer sentiment, contributed to Kia’s strong sales performance, reaching its fourth-highest sales in October.
6. What is the outlook for the passenger vehicle market in 2023?
The consensus is that a robust festive season will drive the passenger vehicle market to grow by almost 7-9%, reaching 4.13 million units for the 2023 calendar year. This projection exceeds initial expectations by about 1 lakh units.
7. How did Hyundai Motor India differentiate this festive season from previous years?
Hyundai Motor India differentiated this festive season by ensuring adequate stock of vehicles at dealerships. This strategy aimed to cater to value-seeking customers and those making instinctive purchase decisions during festivals.
8. What factors contributed to the growth in rural sales for Maruti Suzuki?
Maruti Suzuki’s strong linkages and deep reach in rural areas contributed to higher growth in rural sales (11%) compared to urban areas (9%). Currently, rural sales account for 44% of Maruti Suzuki’s total sales.
9. How did Kia India perform during the festive season?
Kia India witnessed a 20% retail growth during the festive season, thanks to the overwhelming demand for models like the Seltos. The company reported resolving 95% of supply chain issues and expressed optimism for achieving its highest retail sales record by the end of the season.