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Monthly demand for new cars, SUVs and LCVs is reverberating confidence as volumes in September climbed 18 percent year-on-year; and 9 percent during the quarter (July-Sep 20) against the corresponding period last year. What that means is, the uncertainty that covid-19 brought with it is slowly dissipating and consumers are once again making relatively large buying decisions locking in cash for cars.

Among strong performers is Indus Motors that recorded the highest growth at 106 percent in sales during the month. Toyota Yaris which was launched during the lockdown seems to have quickly carved a place for itself with demonstrably strong appetite. Honda remained only slightly behind Toyota registering a sales growth of 87 percent. Amid rising expectations of new entrants disrupting the automobile market space, Hyundai with its SUV Tuscon and LCV Porter clocked in 730 units during the quarter—Tuscon which was launched in July, in fact sped ahead of Fortuner during the month of Sep.

The weakest link is Suzuki—having sold 24 percent less vehicles during the month driven by slow monthly recovery than other segment players. The high-base effect of Alto’s sales this time last year when the car had just been launched may have contributed to the steep decline of 37 percent. It makes sense why this particularly segment is not rebounding as quickly. Even though car financing rates have declined due to lower interest rates—its impact on car purchases will start registering soon—Suzuki buyers are typically middle-class households with limited savings. With the same cars priced substantially higher than only a year ago, potential Suzuki buyers may be reevaluating. On the other hand, Toyota and Honda car buyers typically tend to absorb price incrementals fairly well and often end up paying “own” – a premium—on top of the price of car to get car delivery on time. The appetite for price hikes in this segment is more robust than the niche Suzuki operates in.

The last two years also saw Suzuki sales catapult due to ride-sharing apps and many individuals and investors buying mid-income cars to tie them up on careem and uber. That trend is stalling as it is slowly becoming less lucrative, and more cumbersome for ride-sharers to enter this gig economy.

The market seems to be taking the new comers well, but how well, will depend on the expansion in the market size. If the overall market does not grow—and more new customers don’t enter the auto space—Hyunda and Kia will just shave off some of the market share of existing players.