Speaking on the sales trends during the recent Navratri festival period, Vigneshwar stated that the recent goods and services tax (GST) reforms and subsequent price reductions have acted as a powerful catalyst, invigorating consumer sentiment across the board.
Adding to this perspective, Lalit Bhise, Co-Founder and CEO of BIZOM, observed that post the GST rate cut, while value growth has remained flat, there has been a 10-15% uptick in fast-moving consumer goods (FMCG) volumes. He stated that consumer durables may see a dip in the second quarter due to delayed purchases, though overall volume growth this year is far stronger than last year.
Importantly, Bhise highlighted that premiumisation trends are picking up post-Navratri, and urban consumption is likely to accelerate further in November.
Vigneshwar confirmed that the trend towards premiumisation in the auto sector, which has been gaining momentum for some time, has received a substantial boost. “Premiumisation has been happening quite strongly for quite some time, and I think the reduction in the GST and the overall price reduction would certainly lead to premiumisation,” he stated. Dealerships have observed this trend intensifying over the last month, particularly during the festive sales period.
According to Vigneshwar, consumers are actively choosing higher-spec models or upgrading entirely. “A lot of people are going for a little bit more premium version of the same car, or some customers have actually shifted to the next segment in terms of a two-wheeler or also a four-wheeler,” he explained. This shift is driven by a growing consumer appetite for vehicles equipped with better features, enhanced safety, and greater comfort.
While the premium segment flourishes, Vigneshwar highlighted a crucial and welcome recovery in the entry-level market, which had been underperforming. He described the entry-level segment as “super important” and the very “foundation for an industry,” as it seeds future upgrades. This segment had faced significant “headwinds” and had been “quite stagnant in the last couple of years.” However, the recent market dynamics have reversed this trend. “We have seen a lot of growth happen in the entry-level segments, especially in the two-wheelers and the four-wheelers,” he observed, indicating a broadening of the market recovery.
Furthermore, the FADA President stated a noteworthy shift in the geographic source of demand. For the past several years, the rural market was the primary engine supporting the auto industry. In contrast, urban centres lagged due to significant price pressures that were not commensurate with salary growth. “Because of the price pressures versus the growth in salaries… the urban areas did have pressures,” Vigneshwar said.
He credited the recent GST reforms as the pivotal factor in reversing this imbalance. “This GST reform has certainly helped in terms of these customers coming back to our showroom to buy vehicles,” he affirmed, signalling a strong resurgence in demand from urban consumers.
For the entire discussion, watch the accompanying video