Anticipating that demand may remain subdued, Tata Motors and Mahindra & Mahindra (M&M) are believed to have reduced the passenger vehicle sales target for their dealers for the next two months, people aware of the development said.
After witnessing robust retail sales in October, driven by high discounts during the festival period, the companies are not certain whether the similar demand will sustain.
As part of the inventory-control exercise, Mahindra has asked its dealers to place orders only for the number of units they believe can be sold, moving away from the conventional practice of filling stocks at dealers and setting aggressive sales targets. “While there is still a target given by the area sales manager, it is much lower compared to October,” one of the persons told FE.
Without disclosing absolute numbers, dealers of Tata Motors said their unit sales target has been lowered by between 10% and 20% after October.
“There could be a revision in target from January onwards depending on the sales trend.
“Usually, demand slows down after the festive period and sales in November and December are less as some consumers want models with a new year registration,” a dealer said. M&M and Tata Motors declined to comment for this report.
Most manufacturers are now looking to keep limited stocks till April 2020, when BS-VI emission norms get implemented, as any unsold BS-IV vehicle will not be registered post that and therefore become scrap. Analysts expect pre-buying, if any, could happen only after December.
Rajan Wadhera, president, automotive sector of M&M, on November 11 said sales in the festive season were better than last year but it is to be seen whether the momentum continues in November and December. “We expect pre-buying to take off only during the January-March period next year,” Wadhera had said.
Manufacturers usually set sales targets for their dealers after gauging the trend and incentives are given if they are met.
However, targets are revised when it is anticipated that sales won’t touch a particular mark.