Diwali pushes car dispatch up 23%; but what about actual sales?

New Delhi: Diwali euphoria led car makers to dispatch 23 percent more vehicles to dealerships in October this year compared with the same month last year, making October the fastest growing month in the last 22 months for passenger car dispatches.

But whether this euphoria will translate into actual sales remains to be seen. Some part of the increase in dispatches would be because demand for diesel vehicles has been rising exponentially for some car brands.

According to data released by the Society of Indian Automobile Manufacturers (SIAM), 172,549 cars were dispatched last month against 140,105 in October 2011.

According to data released by SIAM, 172,549 cars were dispatched last month against 140,105 in October 2011. AFP

Even month-on-month there was a significant increase in dispatches since in September (despite the Navratri festival), car dispatches stood at 157,536 units, which was a de-growth year on year.

The same excitement was seen in two-wheeler dispatches too, since 12,85,015 units (11,44,716 units) were dispatched last month.

Month on month also this was a vast improvement since in September dispatches stood at 10,69,069 units (12,27,662units).

Sales of motorcycles rose 6.7 percent to 936,122 vehicles (877,270 units) . Truck and bus sales stood at 66,722 vehicles during the month, compared with 62,013 a year earlier.

So while dispatches have been more in the hope of better sales, discounts have also risen to all time highs for both, passenger cars and bikes.

Tata Motors is giving away benefits up to Rs 1.3 lakh on Indigo Manza petrol, a lakh on Indica vista petrol and up to Rs 40,000 for the Nano. Sumo Gold is cheaper by Rs 1.15 lakh, Safari Dicor by 1.8 lakh and there are additional exchange offer bonus of up to Rs 50,000 on Tata cars.

Toyota Etios and Liva now come with over Rs 40,000 discounts; Hyundai i10 and Santro Xing are available with Rs 50,000 discount each. Most Maruti petrol cars are also available at never-before discounts.

In bikes, Hero's encouraging performance has provided hope to the entire sector. Hero MotoCorp retailed a record 3.5 lakh scooters and bikes in the first 15 days of the festival season last month, during Navratras.

This means its largest selling bike Splendor is obviously back in reckoning and could improve overall two-wheeler sales sentiment if the growth in Hero's retail continues in November too.

SIAM's Director General Vishnu Mathur said there is some cheer in the market "but the struggle is still on. Next month will be quite critical for us. We'll have to see whether this growth is continuing or it is coming down."

Siam had slashed its estimates last month for car sales in the current fiscal year, expecting them to grow just 1 percent to 3 percent.

High interest rates and rising fuel costs have deterred buyers, especially when it comes to mini cars since this is the entry level buyer who is most sensitive to interest rate hikes.

For the first half of this fiscal (which means between April and September this year), passenger car sales remained nearly flat in the domestic market at 10,82,431 units (10,52,560 units) but passenger vehicle category grew by a healthy 10.5 percent because of robust growth in UVs - larger cars which are largely diesel.

So overall UVs were at 15,25,488 units (13,80,170 units) in the domestic market in the six month period. Commercial Vehicle segment also mimicked passenger car growth, up just 4.26 percent at 452,392 units (433,907 units).

Ditto for three wheelers where again, growth was low at just 2.6 percent at 305,738 units (298,086 units). Two wheelers were up 4.5 percent at 80,64,234 units (77,19,054 units).

But exports remain in the red overall, down 5 percent to 16,85,545 units (17,73,055 units). This negativity is almost entirely due to heavy commercial vehicles and three wheeler exports which were down by more than a fourth, year on year.

Bike exports were also down, by over 5 percent while moped exports fell to just a third of the number exported in the same period last fiscal.