September legwork = best festive season ever for carmakers?

Record-breaking sales over the last several months, long waiting periods for their most popular models, increasing pricing power —  a dream run doesn’t get better.

But carmakers seem to be working harder than ever to ensure they have the most memorable festival season to date, just going by the enquiries generated during the Shraddh lull.

Dealers are now out to woo customers with mouth-watering discounts even as component suppliers scramble to meet demand.

And therein lies the catch — while festival season sales may well be robust, they may not surpass records if vehicle supplies are ensured by all stakeholders.

Maruti Suzuki, which is selling all it can make and still has to deny timely deliveries to 20% of its customers, has been doing a lot of legwork during the ongoing  shraddh period, when car buying comes to a virtual halt.

Mayank Pareek, executive officer (sales & marketing), Maruti, told DNA that this year, his salesmen have worked very hard and already managed to generate one lakh bookings for September alone.

“Earlier, we used to wait for the Navratri to begin generating new enquiries but this year all the legwork has been done beforehand. This will mean we have to shell out lesser discounts during the festival; almost 25% of the September enquiries will get translated into sales in October, when Navratri begins,” Pareek said.

Pareek said discounts by Maruti would be at least 10% lower compared with last year but dealers are leaving no stone unturned in their quest for brisk sales.

A quick check across some Maruti dealerships in Delhi revealed that if you want to buy an A-Star, cash discount is almost Rs25,000 this Navratri.
Then you could install Rs5,000 worth accessories and get another Rs15,000 off if you are trading your old car for a brand new A-Star.

The total discount then works out to a whopping Rs45,000.

For the Alto F8 (the older version, with 800 cc engine) the same math works out total discounts to Rs25,000.

Hyundai Motor India also claims that discounts are lower than earlier years because of robust sales but again, dealers are out to woo customers in various innovative ways.

But the situation is not quite so cheerful at the back-end, though.

For parts’ suppliers, the recent demand surge was already creating supply issues but with the arrival of the festival season, pressure has only increased further on their shopfloors.

Now, they are looking to get OEMs to hike prices — and have chosen the peak season to voice their pricing concerns in the hope that their pleas will be heard.

In its latest research report, Antique Stock Broking notes that “production is still not at optimum levels for the automobile industry, with vendors of certain components still playing spoilsport.

As a result, despite these record-high volumes the pipeline remains dry with dealer inventory not enough to meet the upcoming demand comfortably.”    

S Arun, analyst with Bank of America Merrill Lynch, writes that a slowdown in Tata Motors’ Nano sales in September was because of part supplies.

“Passenger vehicles (except Nano) grew 17.3%, largely in line with recent trends, but Nano slowed to 5,520 units (down 32% from August due to component constraints.”

All signs, for now, point to the festival season for car sales. Whether that milestone has been taken will be known by the end of this month.