Can the upcoming season lead to festivities for the auto industry after a gloomy August?
With car sales falling 19% in August, manufacturers are dishing out lucrative discounts and offers to revive sales during the upcoming crucial festive season (next two-three months).
The sales drop in August this year was the biggest in 10 months and, with exports also falling 26%?the highest in 11 years?the automotive industry is now seeking a desperate change in fortunes.
?This is the time when wholesale numbers should be picking up as dealers stock up to meet the festive season demand, but this has not happened,? said Sugato Sen, senior director, Society of Indian Automobile Manufacturers (SIAM), after announcing the sales numbers. ?We are entering a desperate situation and we need help from the government,? he added.
The result of such rapidly falling numbers is evident as buyers now have a plethora of offers to choose from two months ahead of Diwali, the traditional peak time of festive season offers.
German car maker Volkswagen, whose sales fell nearly 28% in the month of August, has slashed prices of the top-end variants of its popular Polo and Vento models. However, the car marker is wary of its brand image and says that the lower prices do not mean the company is offering discounts, rather it aims to give ?more value? to the customer.
?Instead of offering a plain discount, we are offering a better value proposition to the customers,? said Arvind Saxena, managing director, Volkswagen Passenger Cars. ?I don?t think anyone likes giving discounts and the cut in prices of the top variants of the Polo and Vento is more of a value proposition for the buyers.?
Volkswagen has slashed prices for its top-end variants of Polo and Vento by over R20,000 each. The car maker has also refreshed the two models with a host of new interior and exterior features.
Polo?s top variant, the Highline, makes up for 40% of total sales of the model, while Vento?s top variant accounts for the remaining 60%. Volkswagen also continues to offer lucrative financing offers at interest rates lower than that being offered by banks.
?Right now, heading into the festive season, we need to create excitement for our products,? Saxena added. ?Traditionally, the last quarter of the year has been good for car sales and we expect this year too won?t be any different.?
The rising price of petrol has had a big hit on the sales of car makers who do not have a diesel car in their portfolio (despite this week?s diesel price hike, diesel models haven?t lost their value). Japanese car maker Honda is one such company and its sales in August 2012 fell 21% to 5,470 units. The company has decided to offer car insurance at a nominal cost of R1 on select variants of its models to attract buyers.
?Though the macroeconomic indicators are not very encouraging and the general inflationary trends have led to low consumer sentiments, affecting the demand of cars, we are hopeful that the situation will improve quickly and there will be recovery in the market during the festival season,? said Jnaneswar Sen, senior vice-president, sales & marketing, Honda Siel Cars India.
Honda?s Japanese counterpart Nissan?which will soon launch the urban-class utility vehicle Evalia in the country?is also offering discounts on its models Micra and Sunny. The company is clubbing cash discounts along with lower prices offered for insurance.
Tata Motors, Ford India and Maruti Suzuki, all of which have seen falling sales, are offering discounts up to R60,000 depending on location of purchase to try and push up sales during this festive season.
Ford, incidentally, had started special offers on its cars from last month itself to coincide with the festival of Onam in Kerala. However, the company, instead of giving cash discounts, is offering free accessories on its sport utility vehicle Endeavour.
In addition, for existing customers who wish to exchange their cars, Ford is offering discounts of up to R20,000.
Tata Motors? discounts range from R10,000 to R50,000 on select models. Despite having a very strong diesel car portfolio, Tata Motors? sales have been sluggish through the year as its models have failed to create excitement.
?We do offer schemes for specific period and, at present, the discounts on our passenger vehicles range between R10,000 and R50,000, depending on the model,? Tata Motors? spokesperson told newswires.
Although these are bad times for the automobile industry, the upcoming festive season might just work to the industry?s advantage, and any thoughts of the automobile industry mirroring the gloomy August scenario might be dispelled, to an extent, by Diwali. The good news is, the industry is showing some optimism.
