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Auto, real estate firms stare at damp festive season; e-tailers claim record sales

Auto, real estate firms stare at damp festive season; e-tailers claim record sales

Auto, real estate firms stare at damp festive season; e-tailers claim record sales
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By CNBC-TV18 Oct 30, 2018 6:22:48 AM IST (Updated)

Country's festive season has turned out to be dull this year for auto companies and is likely to be for the real estate sector also. However, top ecommerce businesses claim to be making record sales, especially in their smartphone segment this year.

Country's festive season has turned out to be dull this year for auto companies and is likely to be for the real estate sector also. However, top ecommerce businesses claim to be making record sales, especially in their smartphone segment this year.

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According to a Motilal Oswal report, the auto companies, which generally see a surge in their festive sales during this period, have seen their worst Navratri and Dusshera in the last five years.
The report said the festive demand has been around 40 percent for two-wheelers and passenger vehicles dented by rising fuel prices and insurance cost.
Along the passenger vehicle and two-wheeler segments, the commercial vehicle category has also saw a slowdown in October in the subcategory, heavy commercial vehicle, "This was due to liquidity squeeze in the transport system," the Motilal Oswal report said.
Over the last three months, the demand has been extremely poor owing to 15 percent increase in fuel prices, 100 percent jump in insurance cost and 50 bps rise in interest rates. One basis point is a hundredth of a percentage point.
Not only auto companies, but real estate companies are also likely to show a bleak performance in this period after the recent liquidity crunch in the non-banking financial company (NBFC) sector was unfolded.
Anuj Puri, chairman and country head, Anarock, said, "If NBFCs go down and do not fund the projects in the second half of this financial year, we see certainly a big problem coming with the developers as all other funding avenues has got closed. Sales is happening, but is insufficient to be able to bear the total construction cost of the project."
As a Credit Suisse report reiterates, NBFCs and HFCs (housing finance companies) have played a major role in credit supply in recent years, accounting for nearly 25-35 percent of the incremental overall credit. While bank credit growth in the last two years averaged at a mere 7 percent, strong 20 percent-plus growth in NBFC credit aided overall credit expansion beyond 10 percent.
But country's top etailers — Amazon and Flipkart — have claimed otherwise. Both the companies said they made record sales in this period, especially in the smartphone category.
"We made a record-breaking business during the five-day sales festival on October 10-14 in diverse categories, including smartphones, electronic gadgets, home appliances, furniture and fashion," Flipkart said in a statement on Thursday.
The Indian arm of Amazon also said it had record sales across categories during its great Indian festival celebration from October 10-15, with a 12-hour prime early access to its prime members.
Redseer, a consulting firm, had expected the sales to reach $3 billion by the end of the five-day sale period. According to the report, around $800 million worth of smartphones, $170 million worth of large appliances and $120 million worth of fashion have been sold so far during the festive days.
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