Festive sales season ends with a bang: car, smartphone and white goods purchases increase by 50% compared to last year

As consumers finish their last festive shopping on Sunday, companies selling clothing to smartphones, white goods and cars estimate up to 50% more sales between Navratri and Diwali this year than last year.

For auto and electronics manufacturers, growth this season is the fastest in more than a decade.

Industry executives attributed this increase in demand to the sweeping VAT cuts that came into effect on September 22, the first day of the Navratri festival, as well as income tax cuts that put more money in the hands of the middle class, and discounts and promotional offers from the manufacturers.

India’s largest carmaker Maruti Suzuki delivered around 325,000 vehicles between September 22 (when the Navratri festival began) and October 18 (Dhanteras), a 50% increase over the same period last year. The company received 450,000 bookings last month, of which 94,000 units were for small cars.

“We are receiving around 14,000 bookings every day. While demand is high across all categories, vehicles in the 18% GST category are more likely than 40%, indicating positive consumer sentiment in the mainstream market,” senior executive officer (marketing and sales) Partho Banerjee said, adding, “This festive season is going to break all records.”

Several Maruti Suzuki dealers have booked a large site this year to cater to customer requests for deliveries on Dhanteras and Diwali. Each of them also hired 3 to 4 priests to help buyers perform the pujas before taking delivery of their vehicles.

Hyundai Motor India delivered 14,000 units on Dhanteras alone, 20% more than last year. Tata Motors is estimated to supply over 25,000 vehicles during the Dhanteras-Diwali period, a growth of 30% over the same period last year.

GST 2.0 has brought a new set of customers into the market, says Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and president of the Society of Indian Automobile Manufacturers.

“After the tax cuts, vehicles have become more affordable,” he said. “Several cars have come within the budget of customers who previously did not think of buying a car. Several other customers are opting for a higher variant for the same price (who previously had a lower variant).”

Hyundai Motor India has seen strong traction during the festive season with demand picking up from Navratri and continuing through Dhanteras, Chief Operating Officer Tarun Garg said. “This is supported by GST 2.0 reforms, tax cuts and repo rates and positive consumer sentiment.”

Until the GST cut, sales for most categories such as autos, electronics and apparel had been subdued for the past eight to 10 quarters. The recovery in demand also led to a 15-20% growth in festive sales at retailers such as Reliance Retail, Lifestyle International, V-Mart Retail, Vijay Sales and Great Eastern Retail, industry executives said.

SMART PHONES

Market tracker Counterpoint Research says smartphone sales will grow 16 to 18% in value and 9 to 10% in volume. It had initially forecast value growth of 8% and volume growth of 4%.

Tarun Pathak, research director at Counterpoint, said there was some slowdown after the initial online sales around Navratri, but demand has bounced back in the last five to six days, especially in offline retail. “Consumer finance has taken a big leap this year,” he said.

Besides smartphones, categories such as televisions, air conditioners, refrigerators and washing machines have performed well this festive season, although most of them have not seen a VAT cut. Godrej Appliances said festive sales grew by over 50% in value and 45% in volume, while Haier grew sales by over 45%. For both companies, sales growth during the holidays was the fastest on record.

“The best part is that the entry-level segment, which was hit in the last five years, has revived, with categories like single-door refrigerators and semi-automatic washing machines growing by 30-40%,” said Kamal Nandi, head of appliances business at Godrej Enterprises.

However, premium products still caused companies’ revenues to grow at a faster pace.

Sanjay Chitkara, Chief Sales Officer, LG Electronics India, said the GST benefit encouraged consumers to opt for more aspirational products.

Haier India President Satish NS said the year’s backlog due to poor sales till September 21 has almost been wiped out by festive demand, although rural markets got off to a late start due to heavy rains and floods in many places.

WESTERN WEAR QUESTION

Sales recovered strongly after eight-nine quarters for clothing brands and retailers.

Devarajan Iyer, CEO of department chain Lifestyle International, said there is a growth of 15 to 20%, led by western apparel and non-apparel items such as handbags, shoes and fashion accessories. “The sub-₹2,500 segment has grown by over 20%,” he said. For higher-priced items, growth was in the single digits.