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  1. This is the reason why carmakers are set to log big festive season sales

This is the reason why carmakers are set to log big festive season sales

Dealers say the prices of mid-sized cars and SUVs are slightly lower than in the pre-GST period and consequently demand could be robust.

By: | New Delhi | Published: September 18, 2017 6:24 AM
A jump in pre-GST sales and the absence of any big launches notwithstanding, the festival season could turn out to be a reasonably good one for carmakers especially since the hike in the cess has been lower than anticipated. (Reuters)

A jump in pre-GST sales and the absence of any big launches notwithstanding, the festival season could turn out to be a reasonably good one for carmakers especially since the hike in the cess has been lower than anticipated. The only new model in the market will be Tata Motors’ Nexon — a sports utility vehicle (SUV). Dealers say the prices of mid-sized cars and SUVs are slightly lower than in the pre-GST period and consequently demand could be robust. Post-GST wholesale volumes have picked up but retail offtake has remained dull. Analysts say channel checks indicate that retail demand in August has been somewhat muted across segments ahead of the festive season. “Most dealers suggest the high levels of discounts in June and July have led to pre-purchases which continue to impact the recent retail demand,” analysts at Bank of America Merrill Lynch wrote recently.

The festive season is critical for the auto makers since about a third of their sales take place at this time. The season in 2016 was a very good one with a couple of big launches —Vitara Brezza, KUV 100 and Tiago. As of now, discounts are being offered on older models; dealers in the metros say the discounts are about 5-10% bigger than they were last year. While Maruti Suzuki is offering a cash discount of Rs 30,000-35,000 on its small car Alto, the WagonR is available at a discount of about Rs 20,000-25000 depending on the variant. The popular Swift is being sold at around Rs 15,000-Rs 25,000 less across variants while the Celerio comes at a cash discount of around Rs 20,000-Rs 22,000. In addition, there are free gift schemes and lotteries.

Hyundai dealerships are wooing customers with discounts in the range of Rs 50,000-60,000 for the Grand i10; the Korean auto maker’s small car Eon can be bought at a discount of around Rs 55,000-60,000. Unlike in previous years, the waiting period this time around will be much shorter since dealers have stocked up on inventory but have not been able to unload too much post July 1, when the GST was rolled out. A dealer in Mumbai confirmed there was adequate inventory at this point in time.

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