Raghu Reddy, head of categories and online sales for India’s leading smartphone company Xiaomi, is unfazed by the slowdown that has gripped the consumer goods market.

His confidence is not unfounded. Smartphone shipments grew by 10 per cent during the April-June quarter to reach 37 million units, the highest for the quarter. June quarter growth is traditionally the slowest, when shipments usually remain lower than the second half of the year.

The feat comes at a time key players in sectors such as automobile and fast-moving consumer goods (FMCG) have struggled to repeat last year’s performance. Volume growth in FMCG fell to 6.2 per cent in April-June this year from 13.2 per cent three quarters ago. Growth in rural market remained dismal at 5.9 per cent, which was lower than urban after several years.

Smartphones

Offtake of passenger vehicles, a barometer of consumer sentiment for big-ticket items, fared worse in over a decade. It fell by 18.4 per cent during the quarter. Country’s largest automaker Maruti Suzuki’s sales fell for six consecutive quarters till July. In June, its volume sales fell by 17 per cent and it plunged by a whopping 36 per cent — the highest in two decades — in July. Hyundai Motor India, the second-largest player in the sector, witnessed a 10 per cent drop in sales in July, after a 3.2 per cent dip in June.

While the share of sales through online channel in ranges between 36 and 40 per cent, for FMCG, it’s a meagre 1-3 per cent. For passenger vehicles, it is nil. So is for real estate that is holding an inventory of 1.3 million units.

The significance of smart devices in daily lives has also played a role in the growth of smartphone segment. Prabhu Ram, senior analyst at CyberMedia Research, said new buyers and consumers upgrading will keep smartphones out of a slowdown in coming months. The new breed of consumers with aspirations will play a key role in this, he said.

Source: Business Standard

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