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'Nearly all companies are extending festival offers for entry-level, sedan, and hatchback segments.'
Carmakers are extending their offers beyond the festival season this time, with some set to introduce fresh offers for December, primarily targeting entry-level vehicles.
According to industry experts, this move anticipates a potential decline in demand following a successful festival season and a surge in inventory levels to a record high of 63 to 66 days.
"Last month, dispatches totalled around 390,000 units, and dealer stock increased to 63 to 66 days. With Diwali concluded, we observed single-digit growth in the passenger car segment during the season," says Manish Raj Singhania, president, Federation of Automobile Dealers Associations (Fada).
"Nearly all companies are extending festival offers for entry-level, sedan, and hatchback segments. Dispatches need to decrease before stock corrections can occur; otherwise, dealers could face significant financial challenges," Singhania adds.
"So far, retail trade appears favourable, but inventory could become a spoiler."
According to Fada, one company has even gone to the extent of financing the inventory for some categories of its vehicles.
It added that for an inventory of more than one month, a company has extended support to dealers.
Based on Fada's assessment, the current rise is compared to around 50 days in the month of July.
Industry sources suggest that the current increase in stocks is mainly for entry-level models.
"Consumer promotion offers are typically announced for the month. For November, the promotion offers remain unchanged.
"The festival season concluded on November 15, but as customary, the month's offers remain the same. December offers will be announced at the beginning of the month," said Shashank Srivastava, senior executive officer, marketing and sales, Maruti Suzuki India (MSIL).
When asked whether MSIL is funding dealers' inventory costs, Srivastava says, "We have separate dealer sales incentives based on wholesales and retail numbers.
"Currently, we do not have any scheme for funding dealers' inventory costs," says Srivastava. "Generally, retails slow down a bit immediately after the season ends. We have witnessed a similar trend this time as well, but the enquiry levels remain quite stable."
An industry source adds that the sector fears lower sales in November and December.
"Usually, December sales are lower, but this time pent-up demand is gone. Therefore, many carmakers are introducing schemes," he points out.
According to experts, sales may decline in 2024 after bumper sales in 2023.
Honda Cars India also mentioned that its offers were extended until the end of November, and December offers may be announced later.
"The ongoing Great Honda Fest 2023 is the best time to own a Honda car. We are currently running special festival offers on the premium sedan line-up, with benefits up to Rs 88,600 on the Honda City, including a warranty until five years, benefits up to Rs 67,000 on the Honda Amaze, and up to Rs 1 lakh on the Honda City e:HEV," says Kunal Behl, vice-president, marketing and sales, Honda Cars India.
Total passenger vehicle sales (dispatches to dealers) in October were up by 16 per cent to 389,714 units, compared to 336,330 units in the corresponding month last year.
Feature Presentation: Aslam Hunani/Rediff.com
