New Delhi: Leading automakers Maruti Suzuki India (MSI), Honda and Tata Motors expect sales to pick up during the festive season, although there is uncertainty about their performance this year on account of COVID-19 pandemic.
The country's largest carmaker MSI has seen sales improve month-on-month from May till July, and expects offtake to remain robust during August as well.
The auto major, however, feels that the festive season demand would depend on the COVID-19 situation.
"We are relieved that sales bounce back has happened but we will have to wait and watch because a lot of this demand will be pent-up demand and we will have to see how steady the demand would turn out to be," MSI Executive Director Sales and Marketing Shashank Srivastava told PTI in an interview.
"I think it will depend on the economy and Covid scenario because car buying is a discretionary purchase and requires positive sentiment," Srivastava added.
If COVID-19 situation improves, it would lead to improved sales and if somehow the scenario deteriorates then the sales would also be impacted, he noted.
Srivastava said the festive season generally brings good sales as people are more inclined towards spending during the period.
"That is why demand is more in festive season. So in any year festive season is one of the better month for sales, but however this year we would expect festive season to be good but then we are very careful in making this conclusion as you can also have negative sentiment coming from COVID-19," Srivastava said.
So coronavirus situation will predominate as far as sentiment is concerned this festive season, and therefore it is little bit uncertain what will happen during the period, he noted.
In any case, the company is ramping up the production to cater to demand while at the same time also strengthening finance options and digital medium to help customers in buying process, Srivastava said.
The carmaker has seen steady demand emanating from rural areas in the last few months and expects the trend to continue even in the rest of the fiscal.
"Rural sales now account for 40 per cent of the total sales. In fact we are now also witnessing revival in urban centres as well," Srivastava said.
Similarly, Honda Cars India Ltd (HCIL) Senior Vice President and Director-Marketing & Sales Rajesh Goel said the company is optimistic about the upcoming festive period and expects demand to improve, further supporting retail sales.
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"Ever since lockdown opened up, we have been focusing on new launches and refreshments in existing models including all new City,WR-V and Jazz to be ready for the festive season.
"All these new models have helped us create fresh excitement in the market and evoke customer interest. The response to our launches has been very encouraging and we hope this trend will grow in the coming months," he said.
Goel said though the restrictions have been eased, COVID-19 cases are constantly on a rise and there are mini-lockdowns and weekend restrictions being imposed in many parts of the country.
"We have to continue with our efforts to overcome this challenge and adapt to the start-stop method of operations. Currently, about 95 per cent of our dealerships are open," he noted.
Looking at the positives, people seem to have reconciled to the fact that this Covid situation is here for some time, so they are getting back to work with utmost care, Goel said.
There is an inclination towards personal mobility amidst health, safety and social distancing concerns, he noted, adding that consumers are increasingly becoming comfortable with online sales platforms for booking cars.
Smaller towns and rural markets will perform better as buyer sentiments in these demographics are positive and there is lesser impact of COVID-19, Goel said.
Good rabi crop production and favourable monsoon will surely drive the demand in these regions, he added.
On company's preparations for the festive season, Goel said the carmaker is already in the process of ramping up production and hopes to reach 100 per cent of pre-COVID level by September.
"We believe we will be ready to meet the increased demand during the festive season," he added.
The company is all set to introduce the refreshed new Jazz, and bookings for the new model are already open, he noted.
Tata Motors said this year's festive season is going to be an important time for the auto industry as customers will be looking to make big-ticket purchases post the lockdown.
"Despite the slowdown caused by the pandemic, this year's festive season has already begun on a positive note for the company. Our market share has already doubled after the first quarter of this financial year to 9.5 per cent, as compared to same time last year," Tata Motors Passenger Vehicle Business Unit Head, Marketing Vivek Srivatsa said.
Keeping in mind that the coronavirus pandemic has made customers reluctant about venturing out, a primary challenge would be to urge the customers to visit company's showrooms and dealerships, he noted.
"To address this,our approach this festive season will be to focus more on safety along with the positivity of festivals as a theme to communicate with our customers," Srivatsa said.
The challenge going forward will be to drive up demand using marketing led initiatives, he said.
While demand is growing when compared to the initial months when the pandemic struck, most customers still want to wait and watch, and the most important challenge being faced by all brands currently is to assure their customers about sanitisation and safety, Srivatsa noted.
The company is witnessing demand growth significantly higher than the industry for its refreshed range of cars and SUVs, he said.
"So, a robust recovery is underway for Tata Motors and our supplies are being steadily ramped up to cater to the growing demand despite industry-wide challenge in the supply chain," Srivatsa noted.
Automobile demand picking up, but cautious finance cos making market bit slow: Toyota Kirloskar
Automobile demand is picking up but the over-sensitivity and jitteriness of financial companies such as banks and NBFCs are dampening the real conversion of orders to deliveries, according to a senior official of Toyota Kirloskar Motor (TKM).
With the kicking off of festive season, the company has witnessed up to 30 per cent higher flow of orders in August compared to July, although in the last four months it has ensured that 25 per cent of wholesale is reduced every month in order to avoid inventory pile-up at its dealers.
"The number of orders that are flowing in are far higher as compared to July. I would say at least 20-30 per cent higher. One of the issues we are facing is that the financial companies, including the banks and the NBFCs are little jittery about any kind of non-compliance," TKM Senior Vice President, Sales & Service Naveen Soni told PTI.
He further said, "As far as order intake is concerned we are very happy. Everyday we only see good intake in terms of fresh orders but order to delivery time, while we are providing the vehicle accurately based on our supply system, is taking a bit longer because of the issues with financial companies."
Elaborating the issue, Soni said customers who had a loan default of a very small amount ten years ago are now finding it tougher to get loans. Moreover, consumers whose CIBIL score -- which is a consumer's credit score -- at a particular level would have made them eligible for 80 per cent of loan are now getting only 60 per cent at present.
"The risk appetite of the finance companies seem to be very sensitive at this stage...They are becoming overly cautious and sensitive, which is making the market a bit slow. The only reason why there is a dampener is the over-sensitivity of the finance companies towards suspect customers," Soni said.
Stating that auto companies are not asking financial institutions to give out loans irresponsibly, he said there needs to be a consistency in the 'yardstick' of measuring consumers who qualify to avail of car loans.
At the same time, Soni said due to the COVID-19 pandemic-induced lockdown, time taken to do field investigations before approving and sanctioning of loans has also increased.
On the demand side, he said with festivities such as Ganesh Chathurthi and Onam falling in August, the pick up has been definitely better and running at a higher pace than July. The demand has been progressively increasing each month since May after the total washout in April.
In terms of production, he said, "In the last four months, every month despite sales increasing we have made sure that 25 per cent of wholesale is reduced so that stock is reduced at the dealer end. Every month we have been reducing stock month-on-month so that the dealer can manage customer needs at a lower inventory carrying cost."
(PTI Report)
