Buying a car’s easy. Just try getting one delivered on time.
Car makers have launched a bevy of models in recent months in a bid to stimulate demand and prop up dropping sales.
Buying a car’s easy. Just try getting one delivered on time.
Car makers have launched a bevy of models in recent months in a bid to stimulate demand and prop up dropping sales. In fact, around 7-8 major launches happened in September and October alone, the festive season.
However, in a throwback to early 2009, none of the players quite anticipated the overwhelming response or ramped up production lines to meet the surge in demand.
Indeed, passenger cars were the most affected segment during the first two quarters of this fiscal, given a double whammy of rising fuel costs and increasing interest rates. Add to it the labour pain at Maruti Suzuki, the country’s biggest car maker, and going into the festive season few would have bet the current quarter would be any better.
“Popular cars like Alto, i10, Wagon R, Santro, Indica constitute around 35-40% of share in the overall passenger car market. Currently, these models are facing de-growth due to market conditions. Some of the newly launched vehicles are pulling in part of this demand. If we look at waiting periods, most of the newly launched cars are facing production ramp-up problems. With sudden rush in demand, players are not really prepared to cater to the new demand getting generated,” said Mahantesh Sabarad, senior vice-president - equity research, Fortune Equity Brokers.
The upshot? The waiting lists, especially for diesel models, are getting longer.
Maruti Suzuki’s new Swift, launched in August, has a waiting period of around seven months, while Honda’s new Jazz, with a significantly reduced price tag, has a waiting period of around five months.
Mahindra and Mahindra (M&M), the market leader in the sport utility vehicles space, had to stop bookings of its newly launched XUV500 due to unanticipated demand. XUV500, which was launched only in five cities, saw bookings of over 8,000 units in just 10 days of launch. That’s four months’ production, no less.
Somewhat predictably, auto companies are now in a rush to ramp up, to be able to service current bookings and provide for future demand.
“We are not sure about the reopening of the bookings. But our priority is to first cater to the existing customers,” said Arun Malhotra, senior vice president, sales and customer care, automotive sector, M&M.
Honda Siel is no less under pressure. “Demand has shot up ever since we dropped Jazz prices. Previously, we sold 450 units, while currently we are selling some 600 units for past two months. Ramping up capacity will depend on the future demand. We are yet not fully recovered from Japan’s earthquake. There is a limited supply of one of the important components. Situation is expected to stabilise after November,” said Jnaneswar Sen, senior vice-president (sales and marketing), Honda Siel Cars India.
On the other hand, Maruti Suzuki is unable to reach normal production levels due to labour issues at its Manesar plant. Predictably, servicing the waiting list alone is proving to be a nightmare for the officials.
“We have received 100,000-plus bookings by now. Currently, we have a capacity of producing around 16,000-17,000 units of Swift on a monthly basis. However, due to issues related to production, we are not able to reach to that level. There is also further scope of ramping up the capacity once the situation stabilises,” said a senior official.
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