Is it too early to Celebrate Sales Growth for Maruti and Hyundai

Maruti Suzuki and Hyundai have suggested that their demand data might be deceptive. Recently the automakers experienced double-digit growth rates, which gave an impression that buyers were returning to the showrooms but according to dealers and the automakers, it might be a tad early to rejoice.  

R S Kalsi, Maruti Suzuki Executive Director (sales & marketing) said: "I will not say the market has picked up. Growth that we are talking about has come on a low base. If we talk of the July numbers, they are a little deceptive. In June last year, there was an apprehension that the government might withdraw excise duty concessions. As a result, vehicles were pushed heavily to dealerships."

Excise duty on passenger vehicles was reduced to four to six per cent, valid up to June 2014 by the previous central government. Kalsi added "Since the concession was not withdrawn, both wholesale and retail numbers for July last year were low".

In July, Hyundai sales grew by 25 per cent to 36,500 units. the company has a 17 per cent market share.   

Rakesh Srivastava, senior vice-president (sales & marketing), Hyundai Motor India said "There are challenges at the retail level, while we are seeing growth in wholesale. Sales growth is being led either by new products or a few well-established models."

The increase in discount levels this year makes the sales charts look promising, as it is uncanny because discount levels seldom increase with a rise in sales.

Dealers are giving added benefits like free insurance and registration, along with the company-sanctioned freebies like cash discounts, which happen to be across sales outlets. Maruti Suzuki India Chief Financial Officer Ajay Seth"Average discounts per vehicle stood at Rs 16,018 during the June quarter which was actually higher than the Rs 15,116 in the March quarter. This is about Rs 1,000 higher".

Even with the significant decline in the fuel prices, the overall cost of auto loans remain high because of which dealers are forced to give discounts to compensate for the same.

The unpopular choices of Mahindra & Mahindra i.e. the Xylo and the Quanto, offered the highest discounts.   Pawan Goenka,the Mahindra & Mahindra Executive Director said "There is no significant change overall; discounts have been there and they continue to be high,".

No discounts are offered by models like the Hyundai Elite i20, Honda City, Maruti Celerio AMT, Toyota Fortuner and new launches like the Maruti S Cross, Hyundai Creta, Honda Jazz and Mahindra XUV5OO (new).

Also read: Rains Help Increase Car Sales

Source: Business Standard