Mumbai: With festivities kicking in, the automobile sector is leaving no stone unturned— starting from hefty discounts to offering special services— to make up for their lost sales owing to economic slowdown. In trying their best, automakers and dealers are wooing customers waiting to buy their favourite ride until festival season, even if that means auto sector has to take a hit on their margins.
While massive cuts are taken by manufacturers which is as high as 10%, the dealers are also taking cuts in their margin with a hope that demand will pick up. A dealer gets a margin of 3-10% depending on the automobile. If there are high sales, there is a possibility that margins are high. "Dealers with high inventories are closing sales even if the margin is as low as 1-2%," said a dealer.
The automakers and dealers are already offering vehicles in slashed rates due to the slowdown. Prices are expected to slump further with arrival of festive season. Nikunj Sanghi, chairman of Automotive Skill Development Council said, “Keeping the festive season in mind, many are offering discounts that have never been given before. This is the highest-ever discount offered by manufacturers.”
The industry is trying to do away with their inventories. “While many automakers are trying to reduce their inventories by cutting down production or asking dealers to stock the inventories; most dealers are not taking inventories more than required,” revealed a source familiar with this matter.
Every automobile player is following their own strategy. Commenting on the company’s sales strategy, Shashank Srivastava, Executive Director, Marketing and Sales, Maruti Suzuki India, said, “Our dealers are focusing on retail sales through several measures including focused sales events and sales promotion melas. Niche segments are in focus including Government departments, Defense personnel, groundnut farmers and cotton farmers in Gujarat, Fisheries in Bhubneshwar, etc.”
On an average there is a slowdown, but there are some states in India that brings some hope, another source said. “Sales in largely populated North is low compared to South where there is marginal demand.”
Auto industry believes that for revival rural sales has to improve. Due to better monsoons, the consumer sentiments is expected to be positive.
Srivastava added, “Few weeks post Onam, Ganesh Chaturthi, we will have more festival opportunities in other parts of India. We are geared to meet all customer demand and have rolled out attractive consumer offers on a national level to boost retail sales.”
Compared to corresponding period last year, there was a drop of 16% in production of passenger vehicles (PVs) in April-August 2019. While export saw a growth of 4% in PVs, the domestic sales saw a dip of 24% in April-August 2019 as against April-August 2018.