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Automakers Gear Up For Festive Season

Last updated on: September 02, 2024 11:42 IST

...But sales of domestic passenger vehicles dropped 2% to 3% year-on-year in August owing to low demand.

IMAGE: A car from Maruti Suzuki India Limited parked outside a showroom in New Delhi. Photograph: Anindito Mukherjee/Reuters

As the festival season approaches, the automotive industry in India is witnessing a robust expansion of dealership networks, with major players ramping up their presence, especially in Tier-II and Tier-III cities.

This strategic move is aimed at capitalising on the increased consumer demand during this period, ensuring enhanced customer reach and providing seamless buying experiences.

Maruti Suzuki, India's leading car manufacturer, recently celebrated the inauguration of its 500th Nexa outlet.

With this, Maruti Suzuki now boasts of 3,925 outlets under its Arena, Nexa and Commercial formats. These cover 2,577 towns and cities across India.

"Network expansion is an ongoing strategy for us," said Partho Banerjee, senior executive officer, marketing & sales, Maruti Suzuki.

To reach customers in smaller cities, Maruti Suzuki has introduced a new format of showrooms called 'Nexa Studio'. it plans to establish at least 100 such outlets in the second half of this financial year.

IMAGE: A customer stands next to a Mahindra vehicle on display inside the company's showroom in Chandigarh. Photograph: Ajay Verma/Reuters

Mahindra & Mahindra (M&M), which has an extensive network of over 1,370 sales and 1,100 service touch points across India, is also strategically positioning itself for the festive season.

However, the company's approach is governed by a long-term vision, rather than short-term events.

"The channel strategy is primarily governed by a long-term approach, taking multiple factors into consideration, and definitely not adding or deleting outlets based on events," said Nalinikanth Gollagunta, CEO of the automotive division, M&M.

IMAGE: An employee cleans a Tata Nexon car outside the company showroom in Mumbai. Photograph: The Late Danish Siddiqui/Reuters

Tata Motors, which commands a significant share of the passenger EV segment in India, has also opened two new EV-exclusive outlets in Gurugram.

These facilities are designed to offer a comprehensive and unique experience to potential EV customers.

Tata Motors plans to open more such exclusive outlets across key cities in the coming months, positioning itself to dominate the growing EV market.

Volkswagen India is also expanding its footprint, particularly in Kerala, with the inauguration of six new touch points, including city stores and service facilities.

The brand's network expansion comes just in time for the festival season, ensuring that customers have access to premium German-engineered vehicles.

"Kerala has always been a key market for Volkswagen India. Opening of the new touch points and the introduction of special celebratory Onam editions are testament to our commitment to the Kerala market," said Ashish Gupta, brand director, Volkswagen Passenger Cars India.

IMAGE: The BGauss RUV 350 Astro Blue with Black wheels and Platinum Silver with Rouge Orange wheels variant. Photograph: Hitesh Harisinghani/Rediff.com

Electric vehicle (EV) manufacturer BGauss is also preparing for a surge in sales during the festival season.

The company, which specialises in electric two-wheelers (e2Ws), plans to add 25 new dealerships by Diwali to meet the growing demand. This is particularly in Tier-II and III cities.

It will bring BGauss' total dealership count to over 120.

"We have high expectations from the festival season regarding e2W sales. To cater to the strong demand for our products, we plan to add 25 dealerships till Diwali," said Hemant Kabra, founder & CEO, BGauss.

"By expanding our network, we aim to ensure a seamless and enjoyable buying experience," Kabra added.

Classic Legends co-founder Anupam Thareja is also ramping up its dealership network in anticipation of the festival season.

The company plans to increase its dealership count from the current 450 to 600 by the end of FY25, with 100 new dealerships being added before Diwali.

This expansion is part of a broader strategy to strengthen the brand's presence and improve customer access.

Yamaha India recently celebrated the launch of its 300th Blue Square outlet. These showrooms, part of Yamaha's 'Call of the Blue' campaign, are designed to showcase a comprehensive solution for all its biking needs.

With the festival season fast approaching, the automotive sector's dealership expansion highlights the industry's readiness to meet the anticipated surge in demand.

High stock, Not enough buyers, car sales drops 2%-3%

Deepak Patel

New Delhi

IMAGE: Cars are seen parked at the Maruti Suzuki manufacturing plant in Manesar, Haryana. Photograph: Anushree Fadnavis/Reuters

Sales of domestic passenger vehicles (PVs) by automobile companies in August dropped 2 to 3 per cent year-on-year (Y-o-Y) to about 355,000 units owing to low demand and firms reducing production to ease pressure on dealers who hold high unsold inventories.

This is the second consecutive month when PV wholesales have dropped due to low demand and high dealer stocks. In July, PV sales were down 2.5 per cent Y-o-Y to 341,510 units.

Partho Banerjee, senior executive officer (marketing and sales), Maruti Suzuki India (MSIL), said the company had reduced its dispatches to dealers by about 13,000 units in August.

The wholesales of MSIL, India's largest carmaker, stood at 143,075 units, which was a drop of 8.4 per cent Y-o-Y.

Banerjee said MSIL's dealers at the beginning of August held the stocks to cover sales of up to 38 days. This has been reduced to 36 days now.

"Our channel partners (dealers) have reasonably healthy stocks. We are trying to bring them down," Banerjee added.

"Since the festival season is coming, it is not prudent to reduce the dealer stocks any further. Our dealers have an average of 36 days of stocks, which is all right," he said.

"As Navratri will start at the beginning of October, we do not want to further correct our dealer stocks," he added.

"We feel the domestic wholesales of the PV industry should be 350,000-355,000 units."

In August last year, domestic wholesales stood at about 361,000 units.

As car demand slowed in India, dealer stocks have surged to alarming heights.

The situation is so critical that the Federation of Automobile Dealers Associations (Fada) has written two letters to the Society of Indian Automobile Manufacturers (Siam) in the past few months to resolve this matter.

According to Fada, its members are holding around 730,000 units -- enough to cover over two months' sales. Siam, on the other hand, says the stocks with dealers are about 400,000 units.

Hyundai, India's second-largest carmaker, recorded a decrease of 8 per cent Y-o-Y in domestic wholesales at 49,525 units.

Tarun Garg, chief operating officer, Hyundai Motor India, expressed hope the updated Alcazar SUV, which would soon be launched, would help the company drive "strong festive season" growth.

SUVs continue to remain popular among customers. Their share in the industry's PV sales was 54.9 per cent in August.

Feature Presentation: Ashish Narsale/Rediff.com

Anjali Singh

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