Auto buyers cut urge, choose dim Diwali

Vehicle sales in domestic market down 10.9% y-o-y till October 29

Stylish, gloss-finish motorcycles of a leading bike maker displayed on raised platforms adorning the annual sale festival in Vasai, Mumbai,  draw eyeballs from every passerby.

However, sales personnel inside the attractively decorated makeshift pandal, where 25-30 bikes and scooters are parked under glitzy lights, outnumber prospective buyers by 3:1. Eye-catching banners announcing cheaper loans and exchange offers do not excite buyers anymore.

Similar scenes are witnessed in other parts of the country with several dealers complaining of lacklustre enthusiasm amongst buyers who are drawn to car and two-wheeler showrooms only on the lure of discounts.

NOTE: All images used are ONLY for representation purpose.

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Although sales for Diwali period (annually the peak-buying period) for leading companies such as Maruti Suzuki and Hero MotoCorp fare better than that in 2012, it barely manages to scrap through the previous Diwali's record.

Sundeep Bafna, managing director of Fort Point Automotive, said, “This Diwali is only slightly better than last year's. As a dealer, the five to six per cent growth in sales is anytime better than the free fall we saw in earlier months. Last year, we sold 620-odd Maruti cars; this year, we hope to sell 650 units.”

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Fort Point has a Hero Motocorp dealership as well. With discounts hitting their peaks (ranging from five per cent to 15 per cent of the cost of the vehicle), automotive companies are struggling to draw the festive crowds and manage inventory levels running to three to five weeks, putting further pressure on dealers.

For instance, General Motors is offering record discounts ranging from Rs 25,000 to Rs 85,000 across its models to push festive sales.

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According to a top industry executive, vehicle (passenger and commercial) sales in the domestic market have declined by 10.9 per cent to around 277,000 units till October 29 this year, compared to about 310,800 vehicles sold during the corresponding period last year. Sales of passenger cars have declined by 4.6 per cent to 162,000 units, compared to October 2012.

“There is an upward movement. Sequentially over last month, sales are expected to increase by 15-20 per cent due to the ongoing festive season. But market continues to be sluggish. When compared with last year, there may be a decline on five to 10 per cent in the industry in October,” concurred P Balendran, vice-president (corporate affairs) at General Motors India.

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Pravin Shah, chief executive, Mahindra & Mahindra, said: “Diwali sales are better than, say, July or August, but the festive season is not that one used to see in the past. Situation of troubled time continues.

Demand is lesser compared to last year’s Diwali. The repo rate hike might also make a sentimental impact on the buyer.”

“The first wave of festival was good, sales surged by five to eight per cent during Navratri. Footfalls and bookings have been decent, but we have five critical days to go,” said Mayank Pareek, chief operating officer (sales and marketing) at  Maruti Suzuki India.

The company has built inventory of up to five weeks, which it expects to come down to the levels of four weeks or less by November 1.

While two-wheeler demand has gained some traction in the rural markets, thanks to the bountiful monsoon, the gain is squared off by the fall in urban centres.