The auto industry expects car sales to be on the fast lane this festive season on the back of new launches and improved production but is cautiously optimistic on the road ahead once the festivities peter out.

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The festive season, which usually witnesses a spike in automobile sales, begins this year on August 11 with Rakshabandhan stretching up to Diwali on October 25.

"We expect the festive season this year to be the best in terms of passenger vehicle sales on the back of new launches and improved production activity. The industry has been rolling out over 3 lakh units on an average in the past 4-5 months which is helping in retails," automobile dealer's body FADA President Vinkesh Gulati told PTI in an interaction.

He listed erratic monsoon in some parts of the country, inflationary pressures and the looming threat of a China-Taiwan war as some of the challenges to watch out for in the days ahead.

The Federation of Automobile Dealers Associations (FADA) represents over 15,000 automobile dealers across the country. Kia India Vice President and Head of Sales & Marketing Hardeep Singh Brar said that supply chain issues are now showing signs of easing off, and market sentiments remain bullish.

"We are optimistic that a good festive season is ahead of us in terms of sales," he added.

Tata Motors President Passenger Vehicle and Electric Vehicles Shailesh Chandra said the company does not see a concern regarding the customer demand until the end of the festive season.

In an analyst call, he said that the automaker expects the vehicle supply to improve with better semiconductor availability in the second quarter. "Going forward the challenges we see is that the high inflation and interest rate may start impacting the auto demand while there's no stress as far as the second quarter is concerned," he stated.

As far as Tata Motors is concerned, the company remains focused on demand generation activities, Chandra noted. Maruti Suzuki India Senior Executive Director (Marketing and Sales) Shashank Srivastava said the demand seems to be steady at the moment.

"We have to watch out for the retails, currently we are digging conclusions based on wholesales and on the pending bookings...Retail sales have been less than wholesales for the last few months... We also need to see how the economy performs overall and how the inflation and interest rates move," he noted.

Customer sentiment can witness change on account of these factors, he said.

Elaborating on the overall performance of the industry, he stated that in the April-July period this fiscal the passenger vehicle industry has witnessed a growth of 33 per cent over the same period last financial year.

The PV sector has sold 12.53 lakh units this year as compared with 9.41 lakh units last year, Srivastava said. He noted that at the beginning of April the industry stock was estimated to be around 1.20 units which has now gone up to about 2.12 lakh units because the wholesale has been exceeding the retails.

"Therefore we need to be careful going forward as to how it reflects in the future market scenario. At the moment, because of the high pending payments, whatever is being produced is being pushed into the market," he said.