Auto industry banking on festive sales, customers preferring readily available models | The Financial Express

Auto industry banking on festive sales, customers preferring readily available models

It is important to note that though there have been price hikes in entry-level models for both two- and four-wheeler space, the demand for premium cars has outperformed the slowdown in entry-level cars. The situation is not the same in the two-wheeler segment, though.

Auto industry banking on festive sales, customers preferring readily available models

The Indian festival season has started on a positive note for four-wheeler retail sales. For two-wheelers too, rural demand is expected to pick up despite a lukewarm start and provide a fillip to the segment.

Overall automotive sales are in the positive on a year-on-year basis but inflation, incremental revision in prices and the uneven monsoon has failed to give the required impetus in the entry-level segment.

However, looking at the Navratri deliveries, it seems the industry is poised for a robust second half.

Talking to Express Mobility, Vinkesh Gulati, Chairman, Federation of Automobile Dealers Association (FADA) Research says, “The festive season has started on a positive note, especially for the four-wheeler segment and we see a lot of demand there. But the demand for entry-level two-wheeler segment is still not what we were expecting.”

“I think this is because of the price hike in the two-wheeler segment, which has deterred customers to probably delay or rethink their purchase decision. This is despite the fact that OEMs and dealers have come up with lots of schemes and finance options also for the two-wheeler customers,” he added.

It is important to note that though there have been price hikes in entry-level models for both two- and four-wheeler space, the demand for premium cars has outperformed the slowdown in entry-level cars. The situation is not the same in the two-wheeler segment, though.

Nikunj Sanghi, MD, JS Fourwheel, and industry veteran blamed it on the demand-supply mismatch, “If you look at the two-wheeler space the demand for models above 150cc is strong. In fact, for some of the popular models, there is a mismatch in supply and demand, some OEMs are not able to meet the demand for certain models.”

“It is also interesting to note that there are some popular models which have got long waiting period and dealers may lose out on walk-in customers if they are not able to deliver the vehicles during the festive season,” Sanghi added explaining that these customers are also ready to switch to a different brand if they are able to get it early, “hence, the OEMs that have strong supply chain will benefit from this festive season,” Sanghi pointed out.

Coming to the preparedness of the industry, OEMs across the value chain have been building inventory for the last one-and-a-half month and are hoping to be able to meet customer demand. But for certain key car models, shortage of supply has been a point of concern and is leading to customers walking out of showrooms and looking for alternatives and even settling for different brands.

According to Gulati, “many of the popular top-end models for Mahindra & Mahindra, Hyundai Motor India, Kia Motors India, Toyota Kirloskar Motor and Skoda Auto India have long waiting period as the supply is not able to keep up with demand. What we have also observed is that unlike in the past, the demand for black colour vehicles is rising significantly. Earlier, white and silver colour were popular choices.” 

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