Cos offer heavy discounts on cars, SUVs as slowdown bites

NEW DELHI: It's no longer a lot of a festive season for automotive and SUV makers as the spike in fuel and insurance coverage prices + in addition to wealth destruction within the stock markets have dampened buyer sentiment, which is now delaying, and even doing away with new purchases, replacements and upgrades. With inventory levels some distance above the common, companies have began throwing in massive discounts and other 'festive' provides to lure buyers and push sales.

Discounts are being introduced on hatchbacks, sedans, and SUVs by means of companies, starting from mass gamers similar to Maruti Suzuki, Hyundai, Mahindra, Ford and Tata Motors, to luxury dealers like BMW, Audi and Mercedes-Benz. These provides vary from Rs 50,000 on Maruti Alto mini, to Rs 70,000 on Mahindra Scorpio SUV, and going as much as as top as Rs 14 lakh on BMW 7-Series saloon.

Going seems difficult, although the business has controlled to develop 7% in first half finishing September 30 this fiscal. "Sales have been muted because of factors similar to low client sentiment + , top fuel costs and results of monsoon in many portions of the rustic," Rajan Wadhera, head of business body Siam and president of Mahindra & Mahindra's automotive department, mentioned. "People want to postpone purchases as running cost has shot up."

Officials at Hyundai and Maruti agree. "Sentiment remains weak. Apart from fuel and insurance costs, the recent political discourse in the run-up to the elections is also impacting buyer mood. As campaigning gets negative, buyers get apprehensive and unsure of future, and thus postpone big-ticket purchases," an professional at Maruti advised TOI.

YK Koo, MD & CEO of Hyundai India, mentioned state of affairs is "not so healthy". "What is also troubling companies is the crash in the rupee, which has impacted our manufacturing costs. While our inputs are expensive, we cannot pass on the additional costs as sales are slow. Also, it is the festive period where people want lucrative deals." RBI's Consumer Confidence Survey, launched on October 5, mentioned the shopper's belief at the general economic state of affairs and employment state of affairs has worsened in September.

Rupee crashes to new document last low of 74.06 against US dollar

The rupee nowadays touched a lifetime low of 74.23 (intra-day) after the Reserve Bank of India (RBI) unexpectedly kept the coverage price unchanged. The Indian currency closed at 74.06 against its earlier shut (October 5) of 73.76. Forex dealers mentioned the dollar's strength against main world currencies weighed at the rupee sentiment.

Ravi G Bhatia, India president for world automotive information and consultancy firm JATO, mentioned inventory levels at many of the dealerships remain "substantially high" and beyond moderate. "While there has been a correction, inventory is still over 60 days for some companies. This is unhealthy." Bhatia mentioned dealers are also wary in including new inventory all over year-end. "With the model-year changing in 2019, no one wants to carry a large number of cars made in 2018 into the new year."

Siam mentioned forecast for this fiscal needs to be revised downward. "While we had given a forecast of 9-11% at the beginning of this fiscal, growth is now expected only at the lower end," Wadhera mentioned.

The state of affairs stays grim even on the luxury-end where Mercedes-Benz saw a marginal decline in numbers. "There is a liquidity crunch due to a cautious banking system, and traders and SMEs are not getting adequate funding to even meet business needs. Why would they replace or upgrade to an expensive car then?" mentioned some of the best luxury dealers within the national capital. "The turmoil in the stock market has compounded the problem further. We do not expect the market to recover till the elections."
Cos offer heavy discounts on cars, SUVs as slowdown bites Cos offer heavy discounts on cars, SUVs as slowdown bites Reviewed by kailash soni on October 13, 2018 Rating: 5
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