The BJP-led Government still has a lot to do for a full-scale economic revival but the good times could well be back for consumer goods. The rise in consumer demand is, however, yet to translate into growth in core sector products such as steel and cement.

The new Government and the positive environment have got Indians buying cars, white goods and even homes, say manufacturers, retailers, and real-estate developers.

Car sales, which had been stagnant for about a year, recorded the highest ever growth in June. Total passenger vehicles sold in June reached 2,18,828 — up 11.23 per cent year-on-year. This was the first time growth hit double digits in the last 10 months.

Carmakers upbeat

“For a long time, first-time buyers were not visiting the showrooms, but now the footfalls are growing, and are also converting into sales. We grew by 31 per cent in June and expect a similar growth of around 25 per cent in July,” said Mayank Pareek, COO, Marketing and Sales, Maruti Suzuki India.

Analysts expect the total passenger vehicle market to grow by 5-7 per cent in the 2014-15 fiscal and move into double-digit growth rates by the next fiscal. Carmakers say a stable Government and extension of excise duty reduction announced by the previous government have revived sales.

Spending on television sets, air-conditioners, refrigerators and other such white goods has also started. But retailers and manufacturers in the sector are cautiously optimistic about the buoyant sentiment.

Ajit Joshi, CEO and MD, Infiniti Retail, which runs retail chain Croma, said the past two years were challenging for consumer durables with Diwali and Christmas sales being below expectations but consumer sentiment has been improving since May.

“The excise duty cut from 12 per cent to 10 per cent has helped durables players to keep prices stable and not go for any price increase,” said Kamal Nandi, Business Head and Executive Vice-President, Godrej Appliances.

With temperatures soaring in a prolonged summer, products such as ACs and refrigerators saw growth. Interestingly, even non-seasonal categories such as washing machines are showing an uptick in sales, says the industry.

Risks of weak monsoon

However, risks of a late or a weak monsoon remain. “If there is a late monsoon, it will have a direct impact on the purchasing power of rural consumers. This could overall impact the bullishness of consumers to spend during the festive season,” said Eric Braganza, President of Haier India. Real estate developers are upbeat as well. “As of now, there is a marked improvement in buyer sentiment. We expect this to materialise in the near future, particularly this festival season,” said Ravi Saund, Chief Operating Officer, CHD Developers Ltd.

Saund added that a 25-30 per cent price increase is expected in the mid-budget category homes by the end of the festival season.

“There hasn’t been an uptick in sales so far but the number of enquiries has risen. It hasn’t really translated into sales yet but it is likely to ,” said Prashant Solomon, Managing Director, Chintels.

However, consumer demand is yet to translate into demand for core sector products such as steel and cement. Steel consumption in India during the first quarter of the 2014-15 fiscal inched up 0.7 per cent year-on-year to 18.69 million tonnes. In June, steel consumption was up 0.9 per cent.

The cement industry too did not fare much better, with demand growing a little over one per cent. However, industry players said 2014-15 is expected to be better and they hope to end the year with 5-7 per cent higher sales volumes than the previous fiscal.

(Inputs from S Ronendra Singh, Navadha Pandey, Meenakshi Verma Ambwani)

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