Carmakers hit sales record in October | Mint
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Business News/ Auto News / Carmakers hit sales record in October
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Carmakers hit sales record in October

Strong rural demand, better chip supply lift festive sentiment

Wholesale passenger vehicle dispatches grew 16% in October, with retail sales growing at a more moderate 5.8%.Premium
Wholesale passenger vehicle dispatches grew 16% in October, with retail sales growing at a more moderate 5.8%.

New Delhi: Indian carmakers reported record monthly sales in October, buoyed by strong rural demand and improved chip supplies as pandemic-induced supply chain snarls eased, lifting festive sentiment.

Wholesale passenger vehicle dispatches, the number of cars shipped by automakers to their dealerships, grew 16% in October to 390,000 units from 336,679 in the year earlier.

Industry executives, however, cautioned against interpreting the growth as the sole reflection of demand, as automakers had grappled with inventory challenges last year due to chip shortages. Growth in retail sales in October was, however, a more moderate 5.8%, suggesting carmakers were building inventory at dealerships to cater to the expected festive demand surge in the first half of November, coinciding with the Diwali festival, a time when consumers in large parts of India splurge on high-value purchases such as cars and homes.

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Graphic: Mint

Automobile production levels, constrained in recent years due to pandemic-induced disruptions, are rising, helping meet the pent-up demand that has accumulated.

November sales will serve as a critical gauge for carmakers to assess demand and shape their future production plans.

“With only two months left for the year, it seems the industry will end with a growth of close to 7.5%, leading to 4.1 million units in total sales. The growth will be similar, perhaps slightly slower, for the fiscal year, too. These are very encouraging numbers because, at the beginning of the year, we estimated a 5-6% sort of growth," Tarun Garg, chief operating officer of Hyundai Motor India, said, adding the industry has grown nearly 9% this time. He expects Hyundai’s India car sales to grow about 8% in 2023.

Hyundai Motor India, the country’s second-biggest carmaker, retailed just over 55,000 units in the month, a growth of nearly 15%. “However, we shouldn’t get carried away by this growth because we will see wholesales pare down in November," Garg added.

Larger rival Maruti Suzuki India Ltd has cut its fiscal year passenger vehicle wholesale estimates for the industry, and now expects growth in the range of 5.5-6.5% from the previous estimate of 5-7%.

“Now, the stock level is high at 335,000 units, roughly equivalent to 30 days of sales. The first 15 days of November are auspicious, especially for the northern and central parts of the country, and November will depend on how the first 15 days of retail have happened. If retail sales is a little lower than expected, then we might see an impact on the wholesale number going forward from November because the stock is quite high," said Shashank Srivastava, senior executive director of Maruti Suzuki.

Maruti Suzuki saw sales grow 20% to 168,047 units in October from 140,337 the year earlier, nearly double that of the industry, Srivastava added. The company increased its market share to 43% from 41.7% a year earlier.

Carmakers saw stronger sales growth from rural areas than urban regions, though demand for entry-level cars continued to remain subdued.

Srivastava said rural demand grew 11% in October, beating the 8% growth in urban demand. Garg pointed out that at 19.9% of its sales in October, the contribution of rural demand was at its highest ever. Rural consumers, too, displayed the same broad preferences as those in urban regions, favouring sport utility vehicles, Garg said, attributing the robustness of rural demand to steadily improving rural road infrastructure.

Customers continued to favour SUVs during the festive season, with the segment’s contribution to overall sales climbing to 50.7% in October. SUV maker Mahindra & Mahindra recorded its best-ever domestic sales volume at 43,700 units last month, a growth of 30% from a year earlier. Tata Motors saw a 7% increase in October sales from a year ago.

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ABOUT THE AUTHOR
Alisha Sachdev
Alisha Sachdev is an assistant editor with Mint based in Delhi. She reports on the auto and mobility sector, with a special focus on emerging clean mobility technologies. She also focusses on developing multimedia properties for Mint and currently hosts the 'In A Minute' series and the Mint Primer podcast. Previously, she has worked with CNBC-TV18 and NDTV.
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Published: 01 Nov 2023, 11:46 PM IST
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