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    September fails to bring festive cheer for auto industry despite heavy discounts, hopes now pinned on Diwali

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    September fails to bring festive cheer for auto industry despite heavy discounts, hopes now pinned on Diwali

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    ‘Wake me up when September ends’ might just have taken on a real meaning for auto dealerships. After Ganesh Chaturthi failed to make a splash, being the biggest festival in Maharashtra, auto dealerships are now looking to October for some buying momentum.

    ‘Wake me up when September ends’ might just have taken  a real meaning for auto dealerships. After Ganesh Chaturthi failed to make a splash, being the biggest festival in Maharashtra, auto dealerships are now looking to October for some buying momentum.
    The Navratra festival in the first week of October has provided some uptick vis-a-vis last season, but demand has remained well below expectations. Dealer sources CNBC-TV18 spoke to confirmed that sales in the Navratri week leading up to Dussehra were almost at the same levels as last year at worst and seeing marginal growth over the same period year on year at best. However, on a sequential basis, they reported demand rose by 15-20 percent, helped also by the clarity on tax rates on automobiles on 20th September.
    “Ganesh Chaturthi saw a de-growth of 25 percent year-on-year. This year, there was nothing like Ganesh Chaturthi In Maharashtra”, Pawan Ailsinghani, MD, Tejpal Motors told CNBC-TV18.
    Indian buyers prefer taking deliveries of their new vehicles on auspicious days such as Dussehra. “Navratri this year has been good. We've seen more inquiries and conversations happening. We've seen more people taking a decision at least”, Amar Sheth, MD, Shaman Group and President of the Maharashtra division of FADA told CNBC-TV18.
    “Because of the GST decision we've seen a change. It may be pent up demand, but it’s still positive. Compared to last year it's
    “Compared to last year the Navratri season wasn’t very bad, but it was still worse than expected. Perhaps a shade better than Onam and Chaturthi, but not great really, considering there were heavy, never-seen-before discounts on offer, a good monsoon and aggressive financing, especially by PSU banks”, Nikunj Sanghi, Chairman, Automotive Skills Development Council and Director – International Affairs, FADA told CNBC-TV18.
    “There are 20 more days to go for Diwali, all hopes are pinned on it”, he added.
    “September was unusually low this year in terms of sales. So there is a lot of push forward into October, which is why this month is looking good”, a Maruti Suzuki dealer told CNBC-TV18.
    Inventories at auto dealerships started rising last festive season onwards when the distress in the auto sector became visible and recorded an ‘unusual de-growth during the combined festive period’. The FADA called it the worst the dullest festive season in the past few years.
    Since then, the crisis in the auto sector has only deepened, with consumer spending taking a hit, OEMs taking consistent production cuts and inventory running into three months across segments – passenger vehicles, two-wheelers and commercial vehicles.
    However, relief measures by the government in the form of a corporate tax rate reduction, an increased depreciation rate and clarity on the GST on automobiles have now helped customers, especially business owners, find their way back to showrooms.
    “In the Navratri week we have seen customers walking in and our bookings have increased. Before the Navratri festival, we’d get close to two vehicles in a day, now it has gone up to 4-5 bookings in the Honda business”  R Chandrashekhar, Executive Director, Kamal Motors told CNBC-TV18.
    “The discounts on offer have certainly gone up to, and the manufacturer is also participating in it. Discounts have almost doubled. Where we were offering Rs 40,000 discount on the Honda City, now we’re going up even to Rs 80,000.”, he added.
    Most manufacturers have come up with unprecedented discounts and benefit schemes to attract buyers. But that has only helped so much.
    New launches win the festive season
    The Indian auto market is driven by new products. The last few months saw a number of new launches and refreshed models of old models flood the Indian market. It is the new feature-rich launches in the mid-sized SUV space which have bucked the slowdown in the market to register a growth in sales.
    MG’s Hector, India’s largest selling mid-sized SUV in September, opened for bookings again on September 29, just a day before the commencement of the Navratri week. In the first five days of Navratri, an MG dealership we spoke to had clocked 250-300 bookings from its two touchpoints, averaging 40-50 bookings in a day, despite waiting periods that run into months.
    Consumer interest in the Hector has remained high despite a marginal price increase in the second round too. For the Seltos too, bookings are inconsistent.
    Although October has started on a positive note in terms of auto sales, it remains to be seen whether this will be an episode or the turnaround in the story that the industry has been keenly anticipating.
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