Economy

Festival bonanza: It’s raining deals as companies go all out to woo buyers

Our Bureaus New Delhi/Mumbai | Updated on October 02, 2019 Published on October 02, 2019

The consumer durable firms are expanding their entry-level ranges across products to woo buyers in tier-2 and 3 cities.   -  THE HINDU

Automobile, consumer durables, real estate firms on overdrive to make up for sales slump

Shah Rukh Khan’s epic ‘sattar-minute’ (70 minutes) dialogue in Bollywood flick Chak De captures the intensity of a hockey finals. But, given the shoestring spend budgets of consumers today, 31 days of October — a festival month that includes Dussehra and Diwali — will be like 70 minutes on a hockey field for players in sectors such as automobiles, consumer durables and real estate.

Having seen sales slump for several quarters now, companies are banking almost exclusively on the season for a quick turnaround. A good monsoon and the recently announced corporate tax cut have added to the buoyant mood.

The players are now offering aggressive promotional and financing schemes to draw the fence-sitters. While consumer durable companies are eyeing double-digit growth, the automobile sector, which is battling the biggest crisis in a decade, is hoping to put the brakes on a sales slide.

Auto sector on the move

Carmakers have been busy launching new models or refreshed variants in the run-up to the festival season. They are also offering discounts and attractive financing schemes.

Market leader Maruti Suzuki India was quick to announce price cuts of up to ₹5,000 on some of its models after the government’s decision to cut corporate tax rates on September 20. It is also offering discounts of ₹65,000 to up to ₹1 lakh on models such as the Alto, WagonR, Vitara Brezza and Baleno RS.

Companies such as Tata Motors and Honda Cars India have also announced discounts of up to ₹2 lakh and ₹4 lakh respectively.

Senior executives from the automobile industry said this strategy has already led to an uptick in footfalls at their showrooms over the last few days, especially beginning Onam and Navratri. “Customers have responded well to our festive offers as reflected in 11 per cent more retail in September compared with August,” said Mayank Pareek, President, Passenger Vehicles Business Unit, Tata Motors.

Rajesh Goel, Senior Vice-President and Director - Sales and Marketing, Honda Cars India, believes this is the best time for people to buy cars. “We hope the consumer sentiment improves further during the ongoing festive season and helps the sales momentum,” he said.

In the two-wheeler sector, companies are especially hoping to woo first-time buyers, as Sanjay Bhan, Head of Sales, After-Sales & Parts, Hero MotoCorp, puts it. “Growth in the market is driven by first-time buyers, and to attract this segment, we have introduced a host of special schemes including low down-payment, aggressive interest rates and easy EMIs,” he said.

There are also attractive exchange offers, he added.

“In absolute terms, the September volumes of the passenger vehicles were (about 15 per cent) higher than August 2019 as dealers built up inventory with the start of the festival season,” said Hetal Gandhi, Director, CRISIL Research. “In September 2019, retail registration of passenger vehicles increased about 17 y-o-y and were higher than the wholesale estimated offtake during the month, indicating a pick-up in retail sentiments amid higher discounts and festive offers by OEMs.”

Consumer durables upbeat

Companies such as LG, Samsung, Godrej , Haier and Panasonic are offering attractive promotional prices, aggressive financing schemes, gifts, cashback offers, exchange bonuses and extended warranties in the white goods segment.

“Overall, the consumer durable industry witnessed growth in the first quarter of this fiscal, which was led by the appliances segment, particularly air-conditioners,” said Manish Sharma, President and CEO, Panasonic India and South Asia. “While there has been a slump in the last few months, we expect that the festival season, coupled with positive consumer sentiment, will revive the demand.”

What’s driving this optimism? Vijay Babu, Vice President - Home Appliances, LG Electronics India, said factors such as above-average monsoons and good agricultural production in many States, besides bonuses given to Central and State government employees, are expected to put more cash in the hands of consumers.

So while consumer durable firms have launched products at the premium end, they are also expanding their entry-level ranges across products to woo buyers in tier-2 and 3 cities.

Thomson TV, a French electronics brand exclusively licensed by Super Plastronics in India, is eyeing a revenue of ₹500 crore and aims to sell 1.5 lakh units during the season. “As an affordable television company, we invest heavily in our R&D verticals to keep the quality optimum for our buyers...We aim to achieve a 5 per cent market share this festival season,” said Avneet Singh Marwah, CEO, Super Plastronics.

A research by Forrester estimates that online retail spend in India will touch $4.8 billion in the period from September 25 to October 29. “Consumers will look for better deals on marketplaces and get a boost from marketplaces launching new products and offering aggressive discounts and affordable financing,” said Satish Meena, Senior Forecast Analyst, Forrester. “We expect online buyers to spend more during this festive season, shifting spending from offline to online in categories like smartphones, consumer electronics, appliances, and fashion. It’s not only customers in tier 1 and tier 2 cities that will spend more online this season; buyers in tier 3 cities and beyond will, too.”

Banks cash in

Banks are also strategically tying up with companies across sectors to offer cashbacks and special deals. For instance, HDFC Bank has tied up with over 1,000 retail and consumer brands to offer discounts, cashback offers and extra reward points on both in-store and online purchases besides special offers on all banking products.

Its network of over 5,000 branches have been transformed into financial supermarkets, where customers can walk in, speak to the staff and avail special offers. They can also use digital platforms such as the bank website, PayZapp and SmartBuy under the programme called Festive Treats. HDFC Bank MD Aditya Puri said: “We are confident about the India consumption story. The launch of Festive Treats is our effort to further boost it. We believe that we have the products, the reach, the platform and the partners to make this the biggest festive campaign of the season.”

Bank of Baroda is promoting its home loans and other retail loans with concessional rates on the processing fees, said Devinder Pal Grover, General Manager and Delhi Zonal Head. Similar to previous years, the bank has slashed its processing fee for the October-December period this year, too.

Real estate gains ground

Not to be left behind, real estate companies have also come out with offers such as cash discounts and zero stamp duty fee to woo home buyers. Manoj Gaur, MD, Gaursons, said the company has started seeing an uptick in the number of inquiries from Navratri, post its announcement of zero stamp duty and assured gifts.

“Prospective buyers who have already made up their mind to buy a property will go ahead. But festival offers alone may not be a game-changer for the sector, which was hit even before the current slowdown in the economy,” said Mudassir Zaidi, Executive Director (North), Knight Frank India, a realty consulting firm.

According to Prashin Jhobalia, V-P, Marketing Strategy, House of Hirananandani, festivals are important buying occasions in India. Several property seekers advance or postpone their purchase decisions to coincide with festivals. “There have been a slew of measures announced by the government recently, which augers well for the sector. The recent assurance by banks on the transmission of repo rate cuts to homebuyers — a move that will lead to a reduction in EMIs for housing loans — will serve as a major incentive. We are hopeful that this season will improve the sentiments and bring back fence-sitters in the market,” he said.

“We feel that residential real estate in South India continues to hold immense potential in the long term. We have recently witnessed a considerable increase in inquiries for ready-to-move-in homes and for those where the construction is at an advanced stage. Owing to a drop in the rupee, too, enquiries from NRIs have increased across our integrated developments,” he added.

(Compiled by Meenakshi Verma Ambwani and Ronendra Singh with inputs from Garima Singh, KR Srivats and our Mumbai Bureau)

Published on October 02, 2019
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