By Ruma Dubey

It is said that automobile sector is the true indicator of an economy; if the sector reports good sales, it means the entire economy is poised for a surge and when it starts tapering off, it means that the economy is slowing down. Thus buying of vehicles is a reflection of the mood on the ground, a sense of optimism. Truck or commercial vehicle sales and not passenger car is said to be the true barometer of the economy and that is yet to take off.

But this is how it usually works – car sales pick up, overall demand goes on and as demand spikes up, the need for more trucks goes up and thus the economy starts booming. This is a very simplistic way of looking at the economy but the economy is indeed a very simple concept of demand and supply; we complicate it with new terminologies and theories.

For now, at least going by the August month vehicle sales numbers, demand for cars and two-wheelers is up and the good news is that the festive season is just about to take off to full throttle over the next two-three months. It is after a gap of five years that auto sales have shown a rise for the first time. New models, discounts, very lucrative schemes – these reasons apart, the 7^th Pay Commission and the good monsoon has led to a surge in demand.

The total passenger sales for August rose 15% (YoY), with Maruti reporting the highest rise of over 12%. But what is very interesting to note here is that the sales is no longer led by the entry level, lower prices cars but more by higher end models like Vitara, Brezza and Baleno. So what this means is that while Maruti remains the favourite car of Indians, the image is slowly changing from being a “first car” company to a medium-high end car company. Renault Kwid is the most preferred car in the entry level model.

After Maruti, the number two car maker of India is Hyundai Motors and it reported a 6% rise in August sales. Mahindra and Mahindra reported a 29% jump in August sales while sales of Renault Kwid jumped up from a mere 1500 units in August’15 to almost 13,000 units this August. Except for Honda Cars, everyone else reported a rise in sales – Toyota, Tata Motors, Ford, VW and Nissan.

In two-wheelers, except for Bajaj Auto all others did well with Hero MotoCorp leading the pack with a 28% rise in sales and it was closely followed by Honda Motorcycle with a 25% rise. TVS Motor reported a 30% jump in August sales while Yamaha Motor showed a 22% jump.

As the Diwali and Eid season nears, car makers are getting ready to launch a slew of cars with Maruti getting ready with its Ignis. There is the  Jeep Grand Cherokee , the iconic Jeep Wrangler, the Jaguar F­Pace , the Tata Hexa, the Audi SQ7, the Volvo S90 is also ready for a launch.

The good part is that unlike last year, neither is the mood somber nor are car makers sitting on huge pile up of inventories. Dealers say that they are seeing more people walking in than seen over the last two years and that usually means it gets translated into sales as festive season peaks. Yesterday was a very auspicious day for delivery of cars on the occasion of Ganesh Chaturthi and Maruti, along with Tata Motors and Renault reported good deliveries. This augurs well for the sector ahead as more festivals await.

Indeed, it is after five long years that the automobile sector is seeing so much optimism. And car companies are sure to make the most of it. For those looking to buy car stocks and not cars, as usual, Maruti remains a timeless buy, with M&M along with Tata Motors looking good. In two wheelers, TVS remains a true blue-blooded stocks. Tractor sales could also see a spike up as harvest is expected to be good, putting good money in the hands of farmers.

PS: So many new car launches? As such we are stuck for hours in traffic, what happens when more cars come onto the road? Come to think of it, traffic is like our Indian democracy, every time you move ahead, you think you are getting on and going somewhere, only to hit another traffic jam!