May, 27

Festive season bonanza: Electronics & car companies step up production to cater to robust demand

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Consumer electronics and automobile manufacturers are gearing up for the festive season with increased production, aiming to capture heightened demand. CEOs from various companies express optimism, anticipating a robust rebound in consumer interest, according to an ET report. Improved supply chains are expected to improve significantly, as last year’s component shortages ease.
Notable automobile players like Maruti Suzuki, Hyundai, Tata, Toyota, and Mahindra & Mahindra (M&M) are already operating their plants at full capacity, a month ahead of their usual schedule. This move is driven by the anticipation of achieving remarkable festive sales, riding on the improved supply conditions.
The electronics sector is mirroring the sentiment. Brands and contract manufacturers have said they will reach maximum production capacity for the festive season by early September. Unsold inventory levels for electronic goods, including smartphones, televisions, refrigerators, and washing machines, have returned to normalcy, underpinning the optimism.
The surge in demand witnessed during July and August has prompted companies to scale up their factory output. Kerala’s Onam sales have reported a promising 30% growth in the automobile sector compared to the previous year, a trend that sets a positive tone for the festive season.
Shashank Srivastava, Maruti Suzuki’s Senior Executive Officer for Marketing and Sales, emphasized that semiconductor shortages, which were a major bottleneck, have eased, allowing the company to enhance production and address waiting periods for popular models such as Jimny, XL6, Fronx, Brezza, Ertiga. The company has pending orders for as many as 342,000 vehicles, the report said.
The festive season which kicks off with Onam, gathers momentum through Diwali, extending from late August to mid-November. This is followed by the holiday season encompassing Christmas and New Year.
Festive season order books are rising for televisions and washing machines, while smartphones exhibit strong potential, and wearables are experiencing “real high”, shares Atul Lall, Managing Director of Dixon Technologies, a leading electronics contract manufacturer in India. Lall expects high double-digit growth in festive season orders over last year.
CEOs are optimistic about this year’s festive season, expecting an uptick in demand, particularly for entry-level products.
July saw a substantial 18.4% increase in passenger vehicle production to 393,094 units, While Maruti Suzuki saw a 37% surge, M&M and Hyundai also reported production hikes of 15% and 3%, respectively.
A senior executive from M&M said that efforts are underway to minimize waiting periods and expedite deliveries during the festive season. Fresh bookings remain strong, which adds to the existing backlog, the executive said.
In the electronics sector, companies had resorted to production cuts in June-July due to excessive unsold inventory. However, sales have displayed a sequential improvement since July.
Kamal Nandi, Head of Godrej Appliances business, reveals a growth of 18-20% in August sales compared to the previous year, driven by robust Independence Day sales. Trade inventory levels have decreased, prompting a shift to full production capacity from the previous 70%.
While smartphone sales have been on an upward trajectory since July, brands are being cautious about production, as pointed out by Tarun Pathak, Research Director at Counterpoint. He expects Apple, Samsung, and OnePlus to bolster their premium portfolios by 15-20%, aligning with the buoyant demand in this segment.
Car manufacturers project selling over a million vehicles this year, surpassing the 2022 figure of 892,000 units.
Major car manufacturers maintain robust production schedules, although a few challenges stemming from reduced demand have surfaced. Gaurav Vangaal, Associate Director of Light Vehicle Production Forecasting at S&P Global Mobility India, observes the industry’s continued optimism, backed by discounts and escalated production.
Auto dealers are anticipating an outstanding Diwali. Nikunj Sanghi, Managing Director at JS Fourwheel Motors and former president of the Federation of Automobile Dealers Association, foresees a record-breaking festive season if manufacturers effectively manage inventories and cater to demand by ramping up supplies.

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