BackSubdued festival season expected for car makers
Firms plan only limited editions and refreshes of models, compared with more than 12 new launches last year
Premium(Mint)
Mumbai: Hit by slowing demand, carmakers are bracing for a dull festive season.
Usually, manufacturers launch a slew of new models every festive season. This year, there are hardly any models that are new—most of what is on offer are variants of the existing ones.
The festive season, which is considered lucky for big-ticket purchases like cars and houses, kicks in with Ganesh Chaturthi on 9 September—followed by Navratri, Dussehra, Diwali and Christmas.
During last year’s festive season, manufacturers launched more than a dozen new models to keep showrooms busy. They included the Mahindra Quanto (compact SUV), new Maruti 800, Renault Duster (compact SUV), Mahindra Verito Vibe (compact sedan), Chevrolet Sail (sedan) and new Hyundai Elantra (sedan).
The launch pad this season mostly comprises so-called limited editions and refreshes—with the exception of the HyundaiGrand i10 (to be launched on 3 September).
The refreshes and limited editions include the TataSafari Storme Explorer edition, special editions of Toyota Liva and Etios, VolkswagenCross Polo, and SkodaRapid Leisure.
With no sign of improvement in the economy and a looming round of fuel price hike, there will be a harder push to lift demand with offers of better discounts, according to executives at the car firms and dealers.
Car sales in India, Asia’s second biggest market, have been skidding for the last eight months due to a slowing economy, high cost of fuel and rising cost of finance. Passenger vehicle sales contracted 7.49% to 793,708 units from April to July compared to the year-ago period, according to the Society of Indian Automobile Manufacturer, or Siam.
“The monsoons and the festivals are the two positive factors," said R.C. Bhargava, chairman of market leader Maruti Suzuki India Ltd. Bhargava said any further increase in fuel prices would hit sales further.
Even those with a new model are non-committal. Mayank Pareek, chief operating officer (sales and marketing) at Maruti Suzuki said, “The first four months (of the fiscal) have been tough."
According to Pareek, festivals normally boost sales by 20%. This year, “hazarding a guess on sales during festivals is difficult", Pareek said.
The only silver lining during has been a good monsoons, which has strengthened rural demand.
Maruti’s rural sales expanded 20% in the months from April to July over the same period last year.
Sandeep Singh, deputy managing director, sales and marketing at Toyota Kirloskar Motor Pvt. Ltd said his firm would be launching limited editions of Liva and Etios models, apart from a hybrid version of Camry.
Singh doesn’t expect sales to improve in the near term. Sales at the local arm of the Japanese carmaker fell 29.75% in the first four months of the current fiscal compared to the year ago-period.
Utility vehicles market leader Mahindra and Mahindra Ltd, which saw an annual decline of 29% in its July sales—the steepest in several years—is staying away from new launches this festive season. “There are no signs of revival in the economy. The fluctuation in fuel prices because of rupee depreciation has hit UV sales," said Pravin Shah, chief executive (automotive sector) at Mahindra and Mahindra. According to him, the quantum of discounts this festive season is expected to be higher.
Maruti’s Pareek also agreed. It would be higher by at least 20% compared to last year, he said.
Since January, the Indian rupee has fallen 13.9% against the dollar. Effective 1 August, oil marketing companies hiked diesel and petrol prices by 50 paise and 70 paise per litre respectively—the seventh time since 17 January.
“The energy of last year’s festive season is missing this year," said Puneet Gupta, principal at sales, forecasting at research firm I.H.S Automotive. “We expect aggressive discounting this season to push sales."
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