Demand for cars hinges on GDP recovery

New Delhi : Post-festive car sales have not been as bad as expected with pent-up demand playing a positive role, but long and steady demand in the auto industry will depend on the economy and developments around Covid-19 vaccine, according to a senior official of India's largest carmaker Maruti Suzuki India.

"The auto industry was expecting a large decline in consumer interest in terms of bookings and inquiries. Although there has been a decline, it is marginal and certainly not as much as the expectations or the fear that was in the industry," Maruti Suzuki India Executive Director (Marketing and Sales) Shashank Srivastava told reporters in an interaction on Wednesday.

He added that in that sense it is a much more positive scenario post-festival than was earlier anticipated. Going by the current trends of booking and inquiries and low stock levels at the dealers and manufacturers, December should be fine, Srivastava said.

According to the Federation of Automobile Dealers Associations, passenger vehicle retail sales in November witnessed a year-on-year rise of 4.17 per cent to 2,91,001 units as Diwali-Dhanteras period led to rise in vehicle registrations, compared with 2,79,365 units in November 2019.

When asked about the road ahead, Srivastava said, "There has been an element of pent-up demand so far. We really don't know when it will drain out." Therefore, he added, the fresh demand, long and steady demand in the auto industry depends completely on the fundamentals of the economy.

"There is a very high correlation between auto demand and per-capita growth." He said it will also depend on the sentiment surrounding the Covid-19 pandemic. "On those two factors, there is still some sort of uncertainty although we are hearing positive noises on both fronts as well," he said.

Those were the main reasons "why manufacturers are little apprehensive about giving forward guidance for the next quarter and beyond", Srivastava added.