Festival season has been good, see 14% YoY growth in retail sales: Maruti Suzuki Chairman

Underlining the robust consumer sentiments in the automobile market, India’s largest passenger car maker Maruti Suzuki said retail sales of passenger vehicles have been pretty good during the festival season. The automaker estimates its retail sales to grow 14% in the peak festival period on a year-on-year basis.

"Festival season has been pretty good. We are expecting our retail sales, starting from the end of the Shradh period till the end of Diwali, will have roughly 14% growth, compared to the same period last year," Maruti Suzuki Chairman RC Bhargava, told reporters today after announcing the company's second-quarter results.

Festival season in India generally starts with Ganesh Chaturthi or Onam in Kerala towards August end or September beginning and extends till Bhai Dooj after Diwali, in November across the majority of the states. The period from the end of Shradh to Diwali is considered the peak festival season. This year Shradh ended on Oct 2 and Diwali is on October 31.

This is a crucial period for automakers, with volumes accounting for a bulk of their annual sales, as consumers generally make big-ticket purchases during this time due to the cultural significance.

Bhargava's comments come as the company reported an almost 8% year-on-year decline in its operating profit for the August-September period amid a drop in the company's wholesales, or vehicle dispatches to dealerships. Maruti Suzuki's domestic wholesales during the quarter ended September, dropped 3.9% on year, to 463,834 units.

When asked about the decline in wholesale numbers, Bhargava noted that the performance of the passenger vehicle industry is determined by the retail numbers, not the wholesale numbers, and retail sales in the festival season have been much higher than the wholesales.

"We had a situation in the last two months where the industry as a whole has very large inventories available. Our dealers also had well over 30 days of inventory. We have been systematically planning production to cut output to suit the market requirement to bring down inventories. We have reduced wholesale dispatches so that inventories can come down." Bhargava said.

He added that there is no cause for concern that the festival season has not been up to the mark, as the company received over 4 lakh bookings during the period while dealerships reduced the inventory considerably. "Festival season has been as good as one could have expected it (to happen)," he said.

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