Passenger vehicle sales may have risen 33% in November

The spurt in demand for passenger vehicles during the festive period seems to have spilled over with the country's leading carmakers said to have increased dispatches by nearly a third year on year in November.

Companies are estimated to have dispatched 320,000-325,000 cars, sedans and utility vehicles to dealers this month amid sustained consumer demand, a big pile of pending orders, and an improvement in component supplies. This is an increase of 31-33% over 245,000 vehicles sold in the same period last year and the highest growth registered in the segment in the month in 13 years.

Typically, wholesale momentum moderates in the month following festivals. However, a swelling order book buoyed by new launches has helped maintain momentum this time around in the local market.

In the last ten years in November, wholesale volumes have shrunk on four occasions, taking average growth of passenger vehicle sales in the month to a meagre 1.5%.

Automakers in India mostly report wholesale dispatches from factories to dealers and not retail sales to customers.

Interestingly, this is the sixth straight month that passenger vehicle wholesales have crossed the 300,000 mark, making the cumulative tally breach the milestone of two million units in six months.

Shashank Srivastava, senior executive director (marketing and sales) at Maruti Suzuki said the company continues to see healthy order inflow and is constrained mostly in terms of production due to shortage in availability of semiconductors. The country's largest carmaker has pending orders for 406,000 units, at present. "The challenge is to align production with underlying demand patterns," Srivastava said.

Overall, with the industry still sitting on bookings of 800,000-900,000 units, sales are expected to remain strong for the remaining part of the year despite some roadblocks.

"There are a few headwinds," Srivastava said. "Inflation is high, liquidity levels have come down and the increase in repo rates has now started reflecting retail financing. Nearly 80% of vehicles sold are financed and all of wholesale works on inventory financing. We have to wait and see what impact the rise in interest rates has in future."

Additionally, while the economic outlook remains good, GDP growth has been revised downwards for the fiscal to 6.8%, which may have a fallout on auto sales.

Rajan Amba, vice-president (sales, marketing and customer service) at Tata Motors, is cautiously optimistic.