India auto sales soar 20% in September ahead of festive seasons

Showroom attendants polish a Jaguar vehicle at a Jaguar Land Rover showroom in Mumbai February 13, 2013. Hit by falling margins and rising capital expenditure, roaring Jaguar Land Rover (JLR) may be heading for a speed trap. Rising investment is eating into the luxury carmaker's cash pile and raising the prospect of fresh borrowing, while falling profitability is set to tip parent Tata Motors into a first drop in profits in five quarters. Picture taken February 13, 2013. REUTERS/Vivek Prakash (INDIA - Tags: BUSINESS TRANSPORT)

Demand is expected to slowdown in the coming months, however.

During Sep-16, domestic sales of passenger vehicles rose 20% YoY and two wheelers grew 22% YoY, ahead of Diwali and Dussera in Oct-16.

MayBank KimEng’s channel checks suggest the demand for automobiles is 10% more than in the previous two festive seasons.

“We expect demand to normalize lower in Nov and Dec as dealers start cutting inventories,” it said in a report.

The Society of Indian Automobile Manufacturers (SIAM) confirmed the uptrend by revising up its sales growth forecast to 10-12% for FY17 from 6-8%.

“We will wait for two more months of retail sales data before deciding whether to revise up our growth forecasts,” said MayBank KimEng.