The Indian automobile industry will carefully monitor the monsoon conditions after the recent unseasonal rains, as any impact on rural demand would affect the demand for automobiles, according to Maruti Suzuki India Ltd.'s Shashank Srivastava.
"Rural is a very important component in the overall demand for automobiles. The unseasonal rains and the expected irregular monsoon due to El Nino could have an impact on rural sentiment. Going forward, we have to watch that carefully because an impact on rural demand can adversely impact the overall demand pattern as well," the senior executive officer of marketing and sales at Maruti Suzuki told BQ Prime.
For the auto industry, 30% of the sales are in rural areas, he said, adding that the number is over 44% for Maruti Suzuki.
The Met Office recently doubled down on its warnings of heatwaves and disruption in the monsoon due to El Nino—warmer-than-usual waters linked with poor rainfall.
Some states received unseasonal rains in March, damaging wheat, onion, and mustard crops. More adverse weather conditions in the coming months may add to the pain for farmers, eroding agricultural income across the country.
Its impact on rural household incomes may weigh heavily on the passenger vehicle makers, which are already looking at a moderate 5-7% sales growth in FY24 down from 27% in FY23, Srivastava said.
Analysts have already flagged moderated inquiries and footfalls and lower-than-expected bookings for budget models due to rising interest rates.
However, the largest carmaker in the country expects to outpace the industry's growth in the financial year 2023-24.
"We are projecting to go faster than the industry on the back of our new SUVs, such as the Jimny and the Fronx, and higher sales from the Grand Vitara," Srivastava said.
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