Top car manufacturers in the country feel this would turn out to be a slow festive season as they anticipate the demands to be low due to hike in petrol prices and interest rates. Company officials from Hyundai, Honda, Volkswagen and Maruti Suzuki voiced concern that market movement would still be weak towards the end of the month when the festive season starts.
Director of Sales and Marketing, Arvind Saxena of Hyundai India told so far Ganesh Chaturthi hasn’t turned out favourable for them despite offering heavy discounts. Mayank Pareek, Executive Officer (Marketing and Sales), Maruti Suzuki seconded saying hike in petrol prices and interest rates were still visible and was unfavourable at the moment. What best they could expect this festive season is to hope the sales continue to remain the same as last year.
Monthly sales so far do support pessimism in upcoming sales. The top 3 car manufacturers namely Hyundai, Tata Motors and Maruti Suzuki had a drop in their sales for the 2nd consecutive month, which is pessimistic enough to expect what would happen in the coming months. All in all, bad times for car industries in India hovering under a slowdown including Fiat and Ford who are struggling to keep up their volumes.
Neeraj Garg, Volkswagen Director, feels the gloom in the industry was unlikely to come off soon. He tells the market was shrinking and would continue to remain depressed and that the festive season would definitely get tougher for them. In the meantime, Volkswagen is offering special versions for a limited period of their Vento Sedan and Polo hatchbacks in hopes of attracting customers to its showrooms. Garg says dealership traffic is hardly seen.
RBI’s continued approach in taming inflation has been pushing the interest rates higher regularly. Jnaneswar Sen, Senior Vice President (Sales and Marketing), HSIL (Honda Siel India Limited), says there was a hike of 3% in interest rates seen in the last 8 to 9 months and isn’t favourable at all. Sen says interest rates hike is affecting EMIs of home loans and squeezing disposable incomes.
These higher EMIs are definitely impeding growth in sales as financing route account for nearly 70% of sales in cars in India, and the pressure seen here is quite high. Inflation getting steeper and haphazard markets have only aided in adding the negativity in a buyer’s mind. Outgoing President of Society of Indian Automobile Manufacturers (SIAM), Pawan Goenka iterated the current scenario would only dip sales further this year from the present 10% to 11%. The forecast earlier recorded by SIAM was around 16% to 18%, and they are revising this with low demands currently.
Sen says the worst hit was in compact car sector, which was most sensitive to interest rate changes. Sen tells this directly affected other sectors and creates erosion in the car industry regarding volume sales as compact cars were the biggest sector when it came to sales. He says they expected the demand to be picking up at least to some extent, though fears festive season this year might not turn out to be good as it was last year.
Senior Vice President, Marketing and Sales, Anil Dua, Hero MotoCorp, voiced concerns about festive season demands, and they were making a note of negative signals.