Carmakers brace for lower sales growth this Diwali

Roudra Bhattacharya Mumbai | Updated on November 13, 2017


Carmakers' exhausts could backfire this Diwali. Though they have built up inventory at the dealer-end to meet the increased demand in the festive season (September to November), they now feel that the sales growth this year could be half of what it was in the last few years.

‘negative sentiment'

The continuing workers' strike and production halt at Maruti Suzuki, which accounts for 45 per cent of industry sales, will pull down the overall numbers. But a “negative market sentiment” may also lead to purchases being delayed to November -December.

“Sales growth in October — during Diwali — should be 10-15 per cent higher over (what it was) in September. However, compared with last year, the overall growth in the December quarter is expected to be lower than the September quarter. This is because, last year there was a stronger festive season demand and new model launches,” Mr Neeraj Garg, Member of the Board and Director, Passenger Cars, Volkswagen Group Sales India, told Business Line.

General Motor India's Vice-President, Mr P. Balendran, said the incremental growth during the festive season could come down to as little as 5 per cent from the usual 15-20 per cent.

“Compared with the last few months, there will be a growth in October, but it may not match the festive demand seen in the last few years. Even if the growth is halved, it is commendable. There is a lot of negativity (because of higher fuel prices and interest rates) and people are postponing buying decisions,” said Mr Abdul Majeed, auto practice leader at PwC.

Wooing buyers

Carmakers are leaving no stone unturned to attract new buyers. In September, barring Maruti Suzuki, nearly all carmakers reported a double-digit growth rate in wholesale numbers (deliveries to dealers).

A higher inventory (at the dealer-end) would help minimise the waiting period for popular models. In the month, major players such as Hyundai had shown a 13 per cent growth rate, Tata Motors 10 per cent and Mahindra & Mahindra 11 per cent.

Meanwhile, the troubled Maruti Suzuki expects the waiting period for its popular diesel models, and the Swift and SX4, to rise, since fewer cars were produced over the last one and a half months.

“Although there is inventory for some models, we could face increased waiting periods on most cars if the situation continues for much longer than a few weeks,” a company official said.

Industry experts say that with the Gurgaon plant also getting affected, other models such as the top-selling Alto and WagonR could also soon face supply pressure.

Last Monday, industry body, the Society of Indian Automobile Manufacturers, had also downgraded its passenger car sales growth expectations for 2011-12 to just 2-4 per cent from the 18-20 per cent rate it projected at the start of the fiscal.


Published on October 15, 2011

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