Festive season: Bad news for car & bike industry! Lower than expected sales this year

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Mumbai, New Delhi | Published: October 29, 2018 6:06:31 AM

Demand is all but fizzling out say dealers; sales during the Navratri period have been down by 10-20%.

One big reason for the poor consumer sentiment is the crash in the stock markets and this has hit urban demand badly. (Representational photo: Reuters)

Going by the very muted demand for cars and bikes, it’s going to be a dull Diwali. Demand is all but fizzling out according to dealers who say sales during the Navratri period has been down by10-20%. How subdued the sentiment is clear from the observations of RC Bhargava, chairman, Maruti Suzuki India, late last week. “The market doesn’t seem to be showing any kind of buoyancy which is expected during the festival season. The sentiment is not bright,” Bhargava said.

Illustration: Shyam kumar prasad

One big reason for the poor consumer sentiment is the crash in the stock markets and this has hit urban demand badly.

Puneet Anand, senior GM (marketing), Hyundai India, says car sales could well be lower than the last festival season. “Car sales may not be as good as last Diwali from an industry perspective,” Anand told FE.

Down south, the management at TVS Motors was equally circumspect. Sales so far this festive season, they said, had been very modest. The Hero MotoCorp management too indicated that first few days of the festive season witnessed a flattish growth.

“The mood is probably the worst in many years, at least five years. The last time we saw a similar mood was in 2013 when the economy wasn’t doing well, “Ashish Kale, president, Federation of Automobile Dealers Associations (Fada), said. Kale said the usual festive fervour was missing.

“It feels like any other month,” he said, adding that bookings weren’t converting into sales.

Rajiv Bajaj, managing director, Bajaj Auto, said on a television channel last week the growth in two-wheelers was clearly softening even as the festive season had got underway. Bajaj said there was some talk of a fall in demand, with some players expected to clock in smaller volumes than usual, though his firm he asserted was doing well.

Sales of motorcycles and cars have been dented by the new third-party insurance norms and also the rise in fuel prices. Also, the liquidity shortage, some dealers said, had led to a rise in the cost of loans.

Moreover, the crash in the stock markets has resulted in some loss in investor wealth and that’s adding to the gloom.
A Honda dealer based in central Mumbai, said demand is down by 15-20% approximately. “A customer wanting to buy the CB Shine suddenly finds the price has shot up from Rs 66,000 to Rs 71, 000,” he said, adding customers are postponing purchases. Another dealer running a multi-brand two-wheeler showroom said demand is down approximately 25-30%. Yet another West Delhi dealer, selling bikes from the Hero stable, confirmed demand was somewhat slow.

Industry experts say that typically 35-40% of the festival season sales take place during Navratri and the remaining 60-65% during Diwali. In the 2017 festival season, retail sales of cars and bikes are estimated to have grown by 15%.

While in general, rural demand is much better than urban demand, the farm segment isn’t faring well. In Q2FY19, rural sales at Maruti were up 13% year-on-year while the growth in the urban markets was flat.
One Nagpur-based car dealer pointed out that demand could pick up once the crop arrives and is sold though much would depend on the remuneration that farmers, the artiyas and other middlemen get. Moreover, the growth in rural wages is slowing.

  • Kritika Arora & Arun Nayal

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