India's festive season has begun on a strong note for passenger vehicle makers, with the country's largest carmaker Maruti Suzuki reporting a 61% year-on-year increase in retail sales during Onam period in Kerala.
India’s festival season is generally considered to begin with Onam in the South and Ganesh Chaturthi in the West and North, continuing through Diwali.
This year, the 10-day Onam period began on August 17, marking the start of a festive season that will extend until Diwali in the first week of November.
The period is particularly important for vehicle dealerships, as a significant number of consumers consider the festival months auspicious for buying new vehicles.
Base Effect Boosts Growth Perception
However, the year-ago comparison was aided by a low base, as retail sales were badly hit during the Onam period last year between August 26 and September 6 following the announcement of a potential GST cut.
The strong Onam performance comes as Maruti Suzuki expects demand to remain firm during the broader festive season, supported by what it described as favourable market conditions and continued growth in the auto industry.
"Talking about Onam, we had a very good performance. Our retail growth was phenomenal to the tune of 61%," Maruti Suzuki Senior Executive Officer Partho Banerjee said.
The company's market share in Kerala touched 60% in the previous month, he said. Autocar Professional learns that an estimated 16,000 vehicles have been retailed during the last month.
Banerjee said the industry was currently seeing positive factors and did not see any reason why demand should not improve further during the festive season.
"So far, I think we are having good tailwinds. We don't see any headwinds there," he said.
However, he said the industry's growth rate during the festive season may not match the strong double growth seen earlier, as the comparison base would change in the second half of the financial year.
"In the festival time, our take is this that obviously the growth cannot be to the tune of 35% because there is going to be a base effect," Banerjee said.
The industry is estimated to have recorded sales of around 450,000 units in August, compared with about 330,000 units a year earlier, according to Banerjee.
Production Ramp-Up and Order Backlog
Maruti Suzuki is also ramping up production at two newly commissioned plants to meet demand during the festive period. The company expects its production and supply chain teams to cater to market requirements, although the ramp-up of the new lines is still underway.
"We are expecting that our production and supply chain team is able to cater to the market requirement in the festival time also," Banerjee said.
The carmaker has around 180,000 pending bookings and is working to reduce waiting periods for customers, particularly as demand for its newly launched Brezza remains strong.
The company had received more than 50,000 bookings for the Brezza within about 35 days of its launch, with around 35,000 orders pending and a waiting period of about two months.
Maruti Suzuki has maintained its forecast that India's passenger vehicle industry will grow by about 10% in the current financial year, Banerjee said.