AUTO COMPANIES - THIS IS THE TIME TO CASH-IN!

By Research Desk
about 2 years ago

 

By Ruma Dubey

This is the time. The dark phase or the Pitrupaksha is over and the festive season has begun today with all fervor. This the time when retailers are stocked to the brim, gold sellers are hoping to cash-in on the best time of the year, realtors are certain that people will come flocking to buy new homes and over and above all – car makers are the most optimistic. For them, this is the “make or break” kind of season.

Like always, automobile companies are hoping to see sales picking up, starting from Dassera, going into Diwali – the best time light up their earnings. This is the best season during the year for auto companies. The second half is usually their best, with festivals, New Year and then the fiscal year tax rebates.  

The year till now has not been too bad for the auto companies. As per data put out by SIAM, the industry produced a total 11,973,025 vehicles including passenger vehicles, commercial vehicles, three wheelers and two wheelers in April-September 2015 v/s 11,835,239, a growth of 1.16% (YoY). Sales of Passenger Vehicles grew by 6.22% and within this, passenger cars grew by 10%. Overall Commercial Vehicles segment registered a growth of 7% but three and two wheelers showed a decline. Three wheelers showed a 10% decline and within the Two Wheelers segment, Scooters grew by 10% while Motorcycles and Mopeds dropped by - 4.06% and - 5.21% respectively.

So what these numbers show us is that for the festive season, the pressure is more on the two wheeler guys as they need this second half to do end the fiscal on a bumper note. And car makers are also not taking any chances, flooding the market with offers galore. Maruti is offering exchange bonus and cash discount on Alto, Wagon R, Swift and S-Cross. Hyundai provides benefits which includes insurance  and gift cheque. Honda is also giving insurance, exchange bonus and corporate discount, ditto with Mahindra and Fiat. Nissan is giving gold coins, navigation systems, some accessories and also an exchange bonus.

The good news this time is that the festivals are spread across every month and that makes it easy for the customers to make a choice. And talking about choice , they are spoilt for choice what with new launches, limited editions and even facelifts. Some 24 new models have already hit the markets during the last three months. Kwid from Renault is already out and all are eagerly awaiting for Maruti’s Baleno and Tata Motor’s Kite. Mahindra TUV300 is launched now as U301- which is basically an updated version of Quantico. Land Rover in the price range of Rs.50 lakh is also up for grabs during this season.

Auto companies might indeed be looking at a good H2 this fiscal as interest rates have come down and fuel costs are also considerably down. This does not happen too often and most are likely to get an advantage. Rural demand might not see as much of a pick-up due to poor rains and this could mean that two-wheelers might have to sell harder.

All in all H2FY16 does hold the promise of a turning tide and auto companies are sure to come out smiling.

PS: So many new car launches? As such we are stuck for hours in traffic, what happens when more cars come onto the road? Come to think of it, traffic is like our Indian democracy, every time you move ahead, you think you are getting on and going somewhere, only to hit another traffic jam!

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