Festive demand clears automobile stocks

The Diwali period has been very good in sales for car and bike dealers. Many authorised dealerships, including those of Maruti Suzuki, Hero Honda, Bajaj Auto and Hyundai Motors, reported speedy exhaustion of stock, despite all companies keeping inventory as high as possible.

Although most companies had geared for increased production at their plants, most say the surge in demand was unexpected, partly driven by yesteryear purchases which had been postponed earlier due to lack of funds.

Arvind Saxena, senior V-P (sales and marketing), Hyundai Motor India, said: "Diwali this year has been exceptional in comparison to last year. We are still compiling all-India figures but initial indications suggest we have done 60 per cent better. Usually, sales rise by 40 per cent every year during the period."

The Korean brand has a 21 per cent market share and has seen a drop in outright purchases, from 40 to 33 per cent in buying of vehicles by Diwali. This is mainly because of its recent tie-ups with public sector banks, providing attractive financing options.

Leader Maruti Suzuki (car market share of 52 per cent as on September) has reported sales of 12,000 units during the three days from Dhanteras (considered the most auspicious day to buy new products by Hindus) to Diwali.

The company says this would be its best-ever performance during the festival of lights.

R C Bhargava, Chairman, Maruti Suzuki, said: "Although we would prefer to compare our sales performance with that of 2007-08, more than last year when the industry was hit by the slowdown, it (sales) was still much better than that (2007-08) year."

Pune-based Bajaj Auto, too, reported a 'stock-out' (complete emptying of stock) for most of its Pulsar models, as well as the Discover.

Said Milind Bade, general manager, marketing: "The response we received was phenomenal, as we were out of stock for some models very swiftly. We are ramping up production but still what we are producing right now is sold (to dealers) as quickly and this has been going on for the past 40 days. The demand has been well beyond our expectations."

Analysts say the increased push by public sector banks to provide finance at the directives of the Reserve Bank of India, return of positive buying sentiment at the most opportune time (stock market being on an upswing, merging with the festive season) and aggressive marketing push by auto companies resulted in the surge.

S P Shah, president, Federation of Automobile Dealers Association, said: "The average increase in sales has been more than 30 per cent across our member-units. On Dhanteras (October 15), sales in a lot of dealerships doubled when compared to the same day last year."

Anticipating the surge, Maruti Suzuki had raised its production by 25 per cent and asked all its vendors to jack up component supplies for key models like the A-Star, Alto, Ritz, Swift and DZire a few months earlier.

Hyundai, similarly, added a third shift at its Chennai facility last month, just in time to meet the festive demand.

The company had earlier planned to introduce this shift in August last year but was forced to alter this, as the domestic market seemed too weak then to support the additional output.

Image: A Maruti showroom