SUV sales may fail to accelerate in upcoming election season

Internet and the digital economy, blamed for disrupting everything from malls to music, is now changing the "poll" dance routine.

The campaigning ahead of elections, marked by big convoys of SUVs snaking through the hinterlands, is unlikely to cheer automakers like it did in 2014.

Usually, months leading up to the elections drive sales of the fuel guzzlers but the industry insiders and experts are of the opinion that with social media taking over and elections becoming more expensive, the mode of canvassing has changed, resulting in less personal interaction with the voters. This has resulted in lesser demand for the vehicles.

Also, customers are keeping their purchase on hold as they do not want their vehicles to get worn by being used for campaigning.

Veejay Ram Nakra, chief of marketing and sales at Mahindra & Mahindra (M&M) said in many poll-bound states, the customers waited for the elections to get over before purchasing the car as they did not want political parties to take their vehicles for campaigning. "So it is not that sales will definitely increase during the elections," Nakra said on the sidelines of an event for the upcoming sub-4-metre compact SUV, codenamed S201, which will be known as XUV300.

Maruti Suzuki India chairman R C Bhargava recently said during an interaction that there were historical instances of sales being lower in a pre-election year and picking up substantially again in the election year. "We have done an analysis of the past numbers and the conclusion is that in the last two pre-election years, sales always fell," he said.

The low expectations from election season come at a time when sales of passenger vehicles (PV) have been decreasing. Even the recently concluded festive season, which otherwise forms a significant portion of volumes, was lacklustre this year.

During November, the PV sales fell 3.43% on-year, for the fourth time since July as liquidity issues arising out of lack of funding by non-banking finance companies, high fuel prices, poor sentiments, high interest rates. Society of Indian Automobile Manufacturers (SIAM) director general Vishnu Mathur had earlier said that it would a tough task to meet the growth forecast of 7-8% in the PV segment with three months remaining for the current fiscal to conclude.

If statistics are any indicator, then even the 2014 elections, which were the most expensive till date, failed to create any excitement among the customers, particularly for SUVs. Analysts are of the view that the election was won by NDA government on the back of its superior social media management.

The data available with SIAM revealed that the sales of utility vehicles, under which the SUVs are also classified, were down 4.55% in March 2014 at 51,414 units as against 53,866 units in the year-ago period. Similarly, in February also, sales of utility vehicles were down 9.09% at 43,507 units as against 47,859 units in the same month in 2013.

The development is in contrast to the three earlier elections - 1999, 2004 and 2009, when sales had spiked, as deliveries climbed by around 31% on an average or more than twice the average 13% annual rate over the past 15 years, according to SIAM data compiled by Bloomberg News.

Auto sales jumped 49% during the 1999-2000 fiscal year when the BJP-led coalition formed the government. Deliveries climbed 18% in the 2005 fiscal year when the Congress-led coalition took over, and gained 26% in 2010 after the incumbent government retained power.

Ahead of the 2004 general elections which were held in April-May, as per SIAM data, sales of utility vehicles grew by 46.34% to 13,796 units in February 2004 as compared to 9,427 units in the same month the previous year.

Likewise, sales of utility vehicles in March 2004 grew by 6.38% to 16,281 units from 15,304 units in the year-ago month.

NO RALLY IN SIGHT

• Customers are also keeping their purchase on hold as they do not want their vehicles to get worn by being used for campaigning
   
• Even the 2014 elections, which were the most expensive till date, failed to create any excitement among the customers, particularly for SUVs