Weak monsoon may ruin festive season sales
automobile and electronic companies said sales recovery of mass and entry-level products may get pushed by up to 3-4 months from the earlier expectation of a sales spike during the festive season due to scanty rainfall in August, reports of continued scarcity in September leading to a weak overall monsoon, and inflation remaining higher than what was initially expected.
Companies reported sales during Onam — which heralds the festive season in India – was skewed towards premium and high-mid range with mass product sales failing to pick up. To be fair, most companies grew sales by up to 20% in this year Onam over last year, but sales of entry level products remained largely flat, industry executives said.
Electronic company Haier India president Satish NS said the scarcity of rainfall will have an impact on rural economy with food inflation not coming down as expected.
“Overall sales have grown in Onam by about 20-25% solely due to premium products with entry level products continues to be under stress. The mass segment may continue to remain under pressure in Diwali even though we were hopeful of a growth,” he said.
India’s largest two wheeler manufacturer, Hero MotoCorp chief executive officer Niranjan Gupta said the company is looking at growth from a mid-term perspective.
“Recovery (at the entry-level) may get delayed by 1-2 months. But the long-term India story is still strong.
Capex spend on the last three years has been to the tune of Rs 20 lakh crore. And these will start showing effect with a lag,” he said.
Weather watchdog India Meteorological Department (IMD) has said the El Nino phenomenon affected monsoon in August.
