My India First

My India First

Automobile Gross sales: Surge in Q2 FMCG, cellphone, automotive gross sales might deliver festive cheer

Gross sales of fast-moving shopper items (FMCG), automobiles, smartphones, and family home equipment surged within the September quarter, each sequentially and year-on-year, firm executives instructed ET.

Decrease inflation, improved monsoon, fall in costs and gives given by corporations to move on the advantages of decrease enter prices lifted shopper sentiment.

Passenger automobile makers ended September with the all-time quarter, clocking document gross sales.

Chief executives mentioned the consumption increase within the September quarter is an indication that the festive season might go properly. Festive season accounts for as a lot as 30-40% of gross sales in classes corresponding to passenger autos, smartphones, televisions, and home equipment.

The FMCG market grew 8-12% from a yr in the past within the September quarter by worth, as per information from corporations, boosted by a revival in rural demand and worth cuts in a number of classes. Rural sentiment has improved because the monsoon revived in September and ended the yr at close to regular, corporations mentioned.

A report by Centrum, which hosted a FMCG dealer-distributor convention final week, mentioned rural India has been on a path of gradual however regular restoration. “Distributors opined although magnificence and private care classes noticed marginal uptick in demand, but detergents and meals classes fared properly,” it mentioned. Mass phase but to see restoration
“The agricultural shoppers proceed to favor buying smaller packs amid corporations taking some worth cuts in response to waning inflationary pressures,” the report mentioned.

FMCG gross sales had nosedived from the second half of calendar 2021 as excessive inflation and Covid-related financial woes dented demand.

Restoration started within the March quarter, progressed in April-June, and continued within the September quarter.

Auto corporations bought 1,070,377 models within the quarter, rising by 5% year-on-year, and eight% sequentially, as per main corporations. A spate of launches and robust buyer demand for sport-utility autos (SUVs) drove trade volumes.

Consumption of high-value gadgets corresponding to televisions and fridges additionally grew final quarter, however gross sales of mass phase and entry-level merchandise have but to revive.

“Demand parameters stay wholesome, as seen from reserving and enquiries, as we head into the festive season,” mentioned Shashank Srivastava, senior govt officer, advertising and gross sales, at India’s largest carmaker Maruti Suzuki.

Maruti Suzuki’s retail gross sales surged 24% throughout Onam final month.

“Higher availability of semiconductors helps us regulate manufacturing and roll out extra SUVs to fulfill buyer demand throughout the important thing festivals of Dussehra, Durga Puja and Diwali over the subsequent one and a half months,” mentioned Srivastava.

Smartphone gross sales grew 2% in July and August, reversing the gross sales decline this yr, although September numbers would possibly decline because of the excessive base impact of final yr when the festive season began earlier, market researcher Counterpoint Analysis mentioned.

“There are indicators of pick-up in demand which augurs properly for the trade earlier than the festive season,” mentioned Tarun Pathak, director of analysis at Counterpoint.

Electronics and home equipment purchases surged 15% by quantity year-on-year within the quarter following brisk gross sales throughout Independence Day, Onam and Ganesh Chaturthi, as per trade estimates.

Main digital retail chains like Reliance Retail and Vijay Gross sales recorded double-digit gross sales development in August and September, trade executives mentioned. Digital trade quantity gross sales within the earlier two quarters of the calendar yr have been impacted as shoppers curbed discretionary spending and gross sales of AC and fridges remained muted resulting from a weak summer time within the North.

Godrej Home equipment enterprise head Kamal Nandi mentioned the mid-to-premium vary is driving development.

Shopper inflation hit an eight-year excessive of seven.8% in April 2022. After easing to 4.3% in Could this yr, it rose to 4.9% in June, earlier than surging to 7.4% in July, although it eased in August to six.8%.

Decrease inflation lifted FMCG volumes for the reason that March quarter as rural markets bounced again. Over the previous six months, corporations have both diminished costs, elevated pack sizes or launched promotional gives, passing on the good thing about decrease enter prices.

Worth vs quantity
In lots of circumstances, the advance is because of premiumisation and never an increase in volumes.

“We noticed gross sales enchancment in the course of the quarter…However development continues to be largely pushed by worth regardless of worth corrections,” mentioned Krishnarao Buddha, senior class head at Parle Merchandise.

Even for electronics, worth development has been increased than quantity until June as per trade researcher GfK India. As an illustration, cell phone gross sales grew by 12% in worth within the first half of this yr in offline retail, whereas it dropped 4% by quantity.

Procter and Gamble India vp (finance) Gautam Kamath instructed buyers final week that whereas consumption traits are broadly up, price pressures usually are not receding.

“On anecdotal proof, September rainfall seems to have bounced again – and might need a giant say in how the remainder of the yr goes.”

In the meantime, rising crude oil costs are reversing the advantages of enter price decline and elevating manufacturing prices for plastics, paints, FMCG and tyres, amongst others.

“Commodity costs, nevertheless, stay excessive, and we’ve not seen the associated fee pressures receding as anticipated. This implies backside line pressures will stay. In fact, this might differ based mostly on explicit commodities,” he mentioned.

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