South pips north in car, durables & realty

Good pay hikes, positive macroeconomic factors and the taming of inflation have had a positive effect on purchases

South India, traditionally linked with price-conscious consumers, except when it comes to spending on gold, is fast breaking with the past.

The millennial generation, inspired by information technology (IT), the start-up boom and e-commerce growth, is seen as a trigger for the change. From consumer durables to cars to property, southern states have taken the lead.

In the driver’s seat

In a first, passenger vehicle (car, utility vehicles and vans) sales in the south have overtaken the north. It is now the second-biggest market for carmakers, after the western region.

According to the Society of Indian Automobile Manufacturers (Siam) data, sales of passenger vehicles in the southern region, comprising Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu and Puducherry, grew around 17 per cent in the April-June quarter, against a flat performance in the north.

The western and eastern regions grew 4.7 and 4.4 per cent, respectively. The national average was 6.7 per cent.

According to data, 206,335 passenger vehicles were sold during the previous quarter in the south, which was 29.6 per cent of national sales, up from 26.9 per cent in the corresponding period last year.

About 203,000 vehicles were sold in the northern region, forming a market share of 29.1 per cent, down from 31 per cent a year ago. The northern zone includes Delhi, Haryana, Punjab, Himachal Pradesh, Jammu and Kashmir, Uttar Pradesh, Uttarakhand and Chandigarh.

Both Maruti Suzuki and Hyundai, the two biggest carmakers in the country, have witnessed this trend. In the luxury cars segment, too, growth in the south has surpassed the north for about a year.

R S Kalsi, executive director (marketing and sales), Maruti Suzuki, said, “Good pay hikes, positive macroeconomic factors and the taming of inflation have had a positive effect on purchases.”

Durable performance

In the consumer durables segment, too, the southern market is performing better than other regions.

Overall sale in the segment has grown around 25 per cent in the region. In fact, all major companies agree that the south is on top.

“During the first half of the year, our sales in the south grew over 30 per cent because of demand in Telangana, Andhra Pradesh, Tamil Nadu and Karnataka. For other regions, it grew 18-20 per cent,” said Niladri Datta, head, corporate marketing, LG India.

Godrej Appliances showed a wider gap between the south and north. The company’s sales in southern regions grew by 40 per cent during the first six months against 10-20 per cent in other regions. Whirlpool, too, had south taking a lead, with 20 per cent sales growth, against 18 per cent in other parts.

The south is a new jewel for Panasonic India as well. To drive home the point, Panasonic India’s head for sales and service, Ajay Seth said the southern market had grown 32 per cent this year, against 18 per cent last year.

Realty market

In the property market, the southern region is user-driven and not so speculative like the investor-focused north.

While developers in top markets, such as the National Capital Region remain saddled with large unsold inventories, the south held steady.

Job creation across southern markets continued to be a driver for residential real estate sales growth, said Swaroop Anish, executive director (business development), Prestige Group.

The south is also a favourite when it comes to the commercial space.

Data from research firm Colliers established the south has left the north far behind in space absorption.

The share of the south was the highest at 56 per cent during the first half of 2016 in commercial space absorption, followed by the north at a distant 21 per cent, when the big cities of the regions were tracked.

Bengaluru’s total office sector leasing stood at 3.6 million sq ft in the first half, crossing the NCR’s 2.11 mn sq ft.

Giving a big push to the south’s real estate, technology firms and start-ups have increasingly set up base in the region, especially in Bengaluru.

While Apple has leased 50,000 sq ft space in the city this year, Google has leased 100,000 sq ft and MakeMyTrip has set up a 40,000-sq ft technology centre in Bengaluru.

Mobile chipmaker Qualcomm, too, may soon lease 0.5 million sq ft space in the city.

Photograph: Desmond Boylan/Reuters