Buyers looking for exciting discounts and offers on purchase of new automobiles during the festival season this year are likely to be disappointed as demand for new cars is anticipated to exceed their supply.
The industry expects limited discounts and offers, that too largely for vehicles seeing low demand, such as in the entry-level hatchback segment, with waiting periods for popular models averaging about 3-4 months across brands.
“The demand trend seems to be strong, however, going forward it [sales] depends on how production pans out against the underlying demand and the chip shortage, which has become much better,” Shashank Srivastava, senior executive director, (Marketing & Sales), Maruti Suzuki India, said.
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Festive season is important for the automobile industry as these 2-2.5 months typically account for 25% of industry’s annual sales. The festive season in the country begins with Onam and goes on till Diwali.
“This period is very important and I believe this year also we will see very good numbers… So far, in the Onam period, we have received over 12,000 bookings, which is 10-15% above last year… Retail growth should also be 10-15% higher but it all depends on the production,” Mr. Srivastava added.
Maruti Suzuki currently has pending bookings of around 3,77,500 units, while the number is estimated to be about 7,00,000 units for the entire industry.
“The discount level and sales promotion is really a function of demand-supply gap, so you can expect that most of the models will not have good schemes or large discounts. However, there could be some models where the production is better and the demand is steady or not very strong and they can probably see a certain discount,” he said, adding that sales promotion for Maruti Suzuki models is unlikely as the company has huge pending bookings.
“…essentially that gap between the supply and demand will determine the sale promotion. But if you force me to make one observation… I would not expect discount levels to be high in the festival season,” he added.
Echoing similar views, Manish Raj Singhania, President of Federation of Automobile Dealers Associations (FADA) said the demand for passenger vehicles is very good, especially helped by the slew of new launches.
“The last time we saw good discounts on new purchases was in 2019. We expect the demand this festive season to surely exceed the 2019 demand… We still have exchange offers and OEMs will offer schemes for low-selling models,” Mr Singhania added.
He added that the main concern is to deliver the vehicles on time and reduce the waiting periods. “The customers should be open to giving their dealers options… like two brands or in the same brand two variants or different colours,” he said.
Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said, “Strong Q1 has given the much needed boost to the industry after two years of downturn. We expect the industry to further grow in Q2 owing to strong order pipeline, new launches, low channel inventory and festive demand… Industry seems to be well poised to surpass the peak achieved in FY19.”
According to industry experts, consumers may get discounts in the range of ₹20,000 to ₹40,000, depending on the model and trim, besides finance schemes and exchange bonus benefits. In 2019, discounts on vehicles were averaging around 5%, going up to ₹1 lakh in some cases.
Tarun Garg, Director (Sales, Marketing & Service), Hyundai Motor India said, “We will continue to focus on matching supply with demand. With continuously improving semiconductor supply month after month, our production is now at optimum levels . As the demand is still exceeding supply, our priority during the festive season will be to reduce waiting periods and expedite delivery of cars to our customers.”
For Hyundai, the approximate waiting period currently ranges from 3 to 4 months across models.