1. Neither rocking nor shocking, auto sales leading up to Diwali bring no cheer to industry

Neither rocking nor shocking, auto sales leading up to Diwali bring no cheer to industry

Retail car sales during the week before Diwali — which account for 25-30% of the total sales for the year — grew by 12-14%, well short of almost the 20% growth reported by the industry during the same period last year.

By: | Published: October 24, 2017 7:21 AM
auto sales, auto sales in diwali, car sales in diwali, four-wheelers sales, retail sales, implementation of GST, gst in automobile, Mahindra, Tata Motors, Maruti dealers, Maruti dealers in india, festive season As far as four-wheelers are concerned, retail sales have been around 14% and quite short of the growth registered last year. (Image: Reuters)

Retail car sales during the week before Diwali — which account for 25-30% of the total sales for the year — grew by 12-14%, well short of almost the 20% growth reported by the industry during the same period last year, according to dealers in different cities and industry executives. Though dealers are relieved that retail sales picked up from Navratri after remaining subdued for two months, they are wary of a slowdown from November and have not added enough stock to the existing inventory. According to a senior executive of the Federation of Automobile Dealers, festive season sales, especially around Diwali, have been neither rocking nor shocking. “We expected retail sales to pick up during the festive season and the customers did come back to the showrooms but it was not as great as last year. As far as four-wheelers are concerned, retail sales have been around 14% and quite short of the growth registered last year. By the end of this month, we will get more clarity,” explained the executive.

Usually, the companies get a third of their vehicle sales during the festive season but this year, because of the introduction of the goods and services tax (GST), some customers have delayed their purchase, waiting for the GST Council to reduce taxes on vehicles. “We already have a very high inventory since August and retail sales slowed down substantially after picking up before Navratri. It again gained pace from the week before Diwali but still it cannot be compared with the inventory we have, though the bookings on the day of Dhanteras was almost like last year. We are expecting a slow November this time,” said a sales manager at a Maruti Suzuki showroom in Delhi.

Most carmakers pushed inventory in the market following the implementation of GST despite retail sales being very low. Hyundai reported a record dispatch of 50,000 vehicles in September and dealers followed suit by increasing discounts. Maruti Suzuki also dispatched a record number of vehicles from July. Other carmakers, like Mahindra and Mahindra, Tata Motors and Honda Cars, also followed suit.

The total discount for a Grand i20 — one of the most popular vehicles from Hyundai — stood at Rs 90,000, which is probably one of the highest that was offered. Popular premium hatchback Elite i20 also came with a discount of Rs 25,000 to Rs 30,000. Maruti dealers also started offering cash discounts of almost `30,000 for the Swift, while the total discount on the Alto and Wagon R reached Rs 85,000 to Rs 90,000, respectively.

An executive at a Hyundai dealership in Mumbai said that an uptick in retail sales during the Diwali week came as a boost to the market but it did not match the inventory the dealership has already bought from the company. As a result, dispatches in November may be slow. “For the last few years, we have almost 20% increase in retail sales during Diwali but this year, it has been less than that. Still, the good part is that customers have come back and the market is recovering. Some customers also are waiting for tax rates to be reduced and the GST-related confusion to go away. Hence they have postponed their purchase,” explained an executive working in a Hyundai dealership in Mumbai’s western suburbs.

According to initial data collected by a foreign brokerage house, the increase in retail sales during the festive period — Navratri to Diwali — have been around 13-15%, which is remarkably better than July and August but not as good as the festive season last year. “Festive season overall was decent for four-wheelers and very good for two-wheelers but when compared to last year, the volumes growth is not that great. Wholesale volumes for November may also suffer because dealers already have a lot of inventory left,” said a sector analyst with a foreign brokerage.

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