India’s two largest carmakers are planning to raise production to FY18 levels on an expected spurt in auto sales in the forthcoming festival season, according to media reports.

 

Maruti plans to produce around 160,000-170,000 vehicles in October. In June, the company produced around 111,917 units, July production levels are not yet released. Hyundai Motors is likely to raise production to 58,000-60,000 vehicles as the company feels demand would expand during the festival of Diwali in November. Hyundai and Maruti have a combined market share of nearly 70pc in India’s passenger cars segment.

 

Auto manufacturers are wary of the sustainability of demand despite Q3 and Q4 being the best quarters in terms of sales. Production ramp-up is likely to be impacted by supply chain disruptions, said automakers, due to the second round of lockdowns in multiple states. There is also a shortage of skilled manpower and delays in import of components from China.

 

Faster recovery in rural and semi-urban regions have supported demand up in June and July with auto sales improving significantly in July with more than 1.27mn units sold by major automakers. Maruti sold 1,08,064 units in July, a drop of 1pc from July 2019. Hyundai Motors (India) sold 41,300 units in July, down 2pc from July 2019. Recovery of sales was strong in July depicting improved consumer sentiments.

 

If auto companies ramp production, demand for steel, lead, zinc and aluminium will also increase in the festive season, supporting prices of scrap and ingots in the domestic market.

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