Economy

Amid festival season sales, auto firms are cautiously optimistic

Our Bureau Chennai | Updated on November 13, 2020

Even as they hope to maintain the momentum in the market with new launches and associated measures, automotive companies are cautiously optimistic about the demand scenario post-festival season.

It is estimated that more than 2.70 lakh cars were sold in October 2020, helped by pent-up demand and festival season sales. Companies say this is remarkable as three months back, none could forecast that the market would bounce back to this level. However, they are sceptical about the outlook for the next couple of quarters.

“We tend to be cautiously optimistic right now in terms of demand outlook. Because right now it’s pent-up demand mixed with some people buying vehicles for different reasons including social distancing norms,” said Santosh Iyer, Vice-President – Sales and Marketing, Mercedez-Benz India while participating in the 3rd Conversation organised as part of Tamil Nadu Smiling campaign of The Hindu Group.

The topic of discussion was: “Will automobile sector regain its mojo this festive season?” The webinar was moderated by G Balachandar, Senior Assistant Editor, The Hindu BusinessLine.

New offering

Iyer was of the view that manufacturers with new products or refreshes in their portfolio will still be able to excite the market and get some replacement demand in. “We are seeing that in case of GLS model, priced at more than ₹1 crore. It was launched in July. Even now we have three months waiting period for this car in these times. And these are good three-digit numbers. Thus, new models clearly excite the market and we will continue to do that,” he added.

On government support measures, he felt there have been indirect measures to support the auto sector unlike in some other countries where interventions were direct to stimulate demand immediately. Measures such as scrappage policy will spur a good demand.

Narayan Sundararaman, Head of Marketing at Bajaj Auto said there was a need to pep up the sentiments. Consumer sentiments are depressed due to various reasons relating to the health crisis and reduction in income.

He also said there wasn’t any big surge in sales due to personal mobility reason as cited by projections. Bajaj’s own research indicated that less than one-third of people had stated the reason for going for personal mobility instead of relying on public transport.

However, Bajaj has seen good reception to new models such as Pulsar 125, NS200 and for the two new bikes in the KTM range recently. “I think the introduction of new launches has been good for us. But in the overall pie, we are cautiously optimistic,” he added.

Catching up on repayments

“There is definitely a good revival from disbursements perspective. We are expecting that this festival season will bring a little bit more demand. In our business, almost 90 per cent of our moratorium customers started paying their EMI. This was in September and we saw further improvements in October and November. I think the recovery is coming,” said D Arulselvan, Executive VP and CFO at Cholamandalam Investment & Finance Company Ltd.

Published on November 13, 2020

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