No festive cheer for carmakers as buyers defer purchases
MUMBAI: It was a dull Diwali for carmakers this year as uncertainty over the impact of the goods and services tax (GST) held back buyers, particularly businesspeople, said dealers and executives at car firms. Retail volumes failed to keep pace with the large number of dispatches rolled out in the last couple of months by automakers in anticipation of strong sales over the festive season that concluded with Dhanteras on October 17—the first day of Diwali. Now, auto firms may have to reduce inventory in the months ahead.
With the majority of the businesspeople still trying to familiarise themselves with the GST, they are reluctant to make expensive purchases, said dealers.
“Businessmen are still trying to understand the GST and the impact on the overall cashflow; therefore, they are deferring purchases,” said a dealer in New Delhi-based Maruti Nexa dealership, the premium sales network of Suzuki India Ltd. Maruti sold a total of 30,000 cars, the same as what it sold during Dhanteras last year, said an official at Maruti Suzuki India, who declined to be identified.
A Hyundai Motor India Ltd dealer added, “Despite no product availability issues and better schemes than last year, our sales have halved as compared to last year (Dhanteras).” He said customers “are deferring their decisionmaking since there’s little money in the market.”
A Mumbai-based Honda Cars India Ltd dealer spoke of a similar trend. His dealership sold 100 cars this year on Dhanteras and Diwali days as compared to 200 last year.
“Small businessmen who had been operating without proper bills, etc, are in a state of flux and buying a car is not their priority,” said Jnaneswar Sen, senior vice -president (sales and marketing), at Honda Cars India. He declined to mention the retail sales vol- umes for Honda. “It has been a mixed bag with retail sales this Diwali and Dhanteras, averaging 10% of retail sales across the country,” said Rakesh Srivastava, director sales and marketing at Hyundai Motor India adding that the sales could have been better if traders/businessmen, who constitute a large share in the sales pie, had not put off purchases.
Veejay Nakra, senior vicepresident (sales and marketing), of Mahindra and Mahindra Ltd, said Diwali and Dhanteras sales this year have been good and “in line with expectations”.
He didn’t comment on specifics, but added, “It would not be right to compare the two periods as Diwali last year fell in month- end and not beginning of this year. The sales are hence marginally lower this year.”
Passenger vehicle sales in India grew 11.32% in September and 13% in August, riding on good growth in the utility vehicles segment and high dispatches ahead of the festive season, according to the Society of Indian Automobile Manufacturers or Siam.
N. Raja, director (sales and marketing), at Toyota Kirloskar Motor Ltd, said the company’s Diwali retail sales grew around 15% because of a healthy order book. The growth, he pointed out, was led by the western region, as some states like Gujarat, which in the pre-GST regime attracted high taxes, have seen net taxes reduce under GST. His firm, he added could have done better but for supply constraints.