Automakers in India headed for bumper sales in October

With Navratri, Dhanteras and Diwali all coming up within days of each other in the same month, October 2016 is headed to be the best-ever month for the Indian automobile industry in quite a long time. Expect passenger vehicle (PV) sales even go past the September 2016 sales numbers of 278,428 units, which was a near-20% year-on-year growth.

In fact, anticipating a strong festive season on the back of an above-normal monsoon boosting farm production across the country, improved market sentiment and also a flurry of new, affordable models in the past 6-8 months, most carmakers pushed the stock in bulk to dealers in September.

Traditionally, all across India, these three festive occasions are seen auspicious days to buy gold, housing and vehicles. Automakers, particularly passenger vehicle and two-wheeler manufacturers, were initially surprised at the pace of retail sales of Navratri, but then the fireworks began on Dhanteras, which is celebrated two days before the festival of lights – Diwali, and considered to be one of the most auspicious days in a calendar year to buy a vehicle, among other material possessions.

Both Maruti Suzuki India and Hyundai Motor India, have seen high retail sales on Dhanteras. Maruti Suzuki is estimated to have delivered around 30,000 vehicles on that single day, around 20 percent more than the same festive day in 2015. This surge is thanks to the exceptional demand the country’s largest carmaker is seeing for the premium Baleno hatchback and the Vitara Brezza SUV.

Maruti has a problem of plenty and although it has stretched its capacity utilization at its Manesar and Gurgaon plants to beyond 100 percent, waiting periods for these two PVs remains high, For the Vitara Brezza, the waiting is a uniform 6 months across variants including the ch-in-demand top-end ZDi and ZDi+ trims.

The carmaker has ramped up capacity to 9,000-10,000 units per month for the Vitara Brezza at the Gurgaon plant and to 11,000-12,000 units a month for the Baleno at Manesar. The Baleno, which is sold through the premium Nexa outlets, reached cumulative sales of 100,000 units on October 4 while the Vitara Brezza has sold 56,000 units till end-September. Other Maruti cars seeing a surge in demand include the Ciaz petrol AT, Wagon R and the Swift.

Maruti Suzuki is already on a high, having posted robust Q2 and H1 FY2017 results. The company’s net profit has jumped 60.2 percent year-on-year to Rs 2,398 crore in the July-September 2016 quarter.

Hyundai too has seen an uptick in sales on Dhanteras day. "This Dhanteras, customers have done heightened purchases with deliveries of 15,153 Hyundai cars, a growth of 26 per cent over last year," senior vice-president (Sales and Marketing), Rakesh Srivastava told PTI, adding that, “We expect to have over 50,000 deliveries for the full month, making this festival season as the best in the last couple of years."

Demand for SUVs, MUVs and MPVs (like the Innova Crysta) is also on the rise, so expect OEMs like Mahindra & Mahindra and Toyota Kirloskar Motor to also post good results in October. Thanks to the growing demand for its Tiago, Tata Motors, which is gearing up to launch the Nexa crossover in January 2017, should also benefit from the festive mood among consumers.

PVs set to drive past 3 million sales in FY2017

A total of 1,494,039 passenger vehicles (PVs) were sold in the April-September 2016 period, a year-on-year increase of 12.34%. Given the fast-paced momentum of sales in October, the much-improved market sentiment, disbursement of the Seventh Pay Commission payouts and return of good times in rural India after a bountiful monsoon in most parts of the country, industry could be seeing PV sales crossing the 3 million mark for the first time ever.

Hero MotoCorp and Honda likely to post new highs

If carmakers are seeing higher footfalls in showrooms and record sales, can two-wheeler manufacturers be behind?

Both Hero MotoCorp, the country’s largest two-wheeler maker, and Honda Motorcycle & Scooter India (HMSI) are on track to post new record highs in Octrober 2016. In fact, both companies had increased production and had been stocking up their dealerships in September itself, being ready for the festive rush of orders.

Last month, Hero had reported its highest-ever monthly sales for September 2016 – 674,961 units last month, up by 11 percent YoY. Its previous highest was recorded in October 2015, when it had reported total sales of 639,802 units.

Expect Hero to record a new high in October 2016, crossing the 600,000 unit sales mark for the third consecutive month, having sold 616,424 units in August. It has crossed the 600,000 unit sales mark in March (606,542 units) and also in April (612,739 units).

Giving a new momentum to its sales is demand for its new scooter models – the Maestro and the Duet – along with the 125cc Glamour and the successful reception of the Splendor iSmart 110 in the market. The latest Splendor model is the first grounds-up motorcycle designed and developed by the company’s in-house R&D team.

Hero has also rolled out an all-new 150cc Achiever motorcycle, which is now powered by a BS IV-compliant engine and comes equipped with Hero-patented start-stop (i3S) technology for enhanced impact on the fuel economy.

HMSI too is confident of bumper sales. Yadvinder Singh Guleria, senior vice-president, (Sales and Marketing), HMSI, had said last month, “The positivity in the economy led by 7th Central Pay Commission, One Rank One Pension (OROP) disbursements and favourable monsoon has translated to a robust return of demand in two-wheeler sector ahead of festivals. Honda’s festive planning started six months ago. By leveraging the 12 lakh additional production bandwidth coming from the fourth plant (Gujarat-based scooter facility), Honda is for the first time ever ensuring ready availability of all its models including the Activa throughout the festive season right up to its last mile rural network. Overall, led by festive buying, Honda is confident of bumper October sales.”

Earlier today, HMSI released a statement that celebrating the crossing of 28 million customers milestone. Meanwhile the NAVI crossover had gone past the 50,000-unit mark in six months after its market launch.

Other record October sales achievers are expected to include Bajaj Auto, India Yamaha Motor, Royal Enfield and TVS Motor Co. While the two-wheeler industry is scaling new volumes, this also highlights a maturing and expanding market, which is being led by the growth in the scooter segment from the front.