Auto companies ramp up discounts, cut prices amid demand revival hope

Automakers are hoping for October to bring the demand spike that is typical of the festive period, after a subdued start to the season, with sales during Onam and Ganesh Chaturthi failing to match expectations. And to entice potential buyers who may still be undecided about the timing of the purchase, the companies are offering incentives and hefty discounts.

The festive period of around two months that starts with Ganesh Chaturthi and Onam and climaxes around Diwali is the peak consumption season in India. For the auto industry, this period accounts for about 30- 40% of the annual sales. This year, the main festivals of Navaratra, Dussehra and Diwali are all in October. This is making automobile manufacturers optimistic of a strong pickup in demand.

Automakers such as Honda Motor, Hyundai Motor, Mahindra & Mahindra and Maruti Suzuki have already taken price cuts and raised incentives, according to data collated by automobile consultancy Jato Dynamics. Tata Motors and JSW MG Motor have increased offers on some models but raised prices on certain others, show the data.

The companies are also betting on new models to drive sales. Automakers have three levers to push sales when the pull or consumer demand slackens, Jato Dynamics president Ravi Bhatia said. “The levers are new model launches, price suppression (given as discounts in the form of cash or other services), and price cuts which are usually the last resort.” Sales of cars, utility vehicles and vans — collectively referred to as passenger vehicles (PVs) — have slowed amid waning of the post-Covid pentup demand. As per latest data from the government’s Vahan portal, PV retail sales in September totalled around 277,000 units as on Saturday, compared with 309,000 units in August. Retail sales in September may just about match August figures, as this year PV demand has been sluggish with sales falling month on month, said dealers.

Weak retail sales have caused an increase in the number of cars lying at the stockyards of dealers, raising their inventory cost. Nikunj Sanghi, an automotive dealer, hopes the situation will improve from October. “With the main festive season kicking off from Navratra and the marriage season in November, we are hoping to ease a bit of our inventory levels,” he said.

In Kerala, where the main consumption period is around Onam (in September this year), discounts were “reasonably good” in August and September, said a prominent dealer of Maruti Suzuki, the PV market leader. “October and November are lean months for us, and car companies allocate less stocks to Kerala,” he said, as automakers shift their focus to markets where sales peak during Navratra and Diwali.

“This will also help us correct stock levels. Most dealers are holding inventory between 75 and 90 days across India.” Automakers have been gradually responding to their dealers’ concerns about the demand slowdown and high inventory by making offers on vehicles more attractive.

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