Deficient Monsoon Poses Risk To Million Car Sales Target In Festive Season: Maruti Suzuki

The auto industry's highest ever monthly sales in August indicate the carmakers' expectation of a bumper festive season, but another month of deficient monsoon may derail the momentum, according to Maruti Suzuki India Ltd.

"While the going has been very good, we still have two points where we have to really watch out for if this demand is to continue," Shashank Srivastava, senior executive officer of marketing and sales at Maruti Suzuki, told BQ Prime. "One is the rainfall pattern, which in August was admittedly quite adverse, and in September, we have to wait and see where the monsoon goes."

Another month of deficient monsoons may hit sentiment and push up food inflation, which may attract another rate hike from the central bank, he said.

The higher rates may impact car sales, as over 80% of such sales in the country happen through financing.

August was the driest month on record in India since 1901, with a rain deficit of 33% as compared with earlier expectations of a 6–10% deficiency, according to the Indian Meteorological Department.

While the forecast for September is for a normal monsoon, the pattern may be uneven, with certain regions receiving an above-normal monsoon and others witnessing below-normal rainfall. The minimum temperature is also likely to be higher than normal in most parts of the country.

This comes amid the 83-day festive period in the country, which started in Chingam month in mid-August and will end with Bhai Dooj in November. Sales during this period are generally 23-26% of the annual sales of the passenger vehicle industry, Srivastava said.

According to the automaker's projections, the industry is likely to grow by 5–7% to 41 lakh units in the ongoing fiscal. This means the industry should see sales of close to a million units during the holiday season.

According to Srivastava, the first impact of a deficient monsoon will be seen on the Kharif sowing.

However, the actual impact on agricultural output may not be as high due to improvements in the irrigation infrastructure over the years, but below-normal rains may affect sentiment in rural markets, he said.

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