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Planning to buy a car? Forget freebies and cash discounts

September 02, 2020 12:29 IST

Pandemic-hit auto majors are likely to set aside these time-tested strategies for now, and, instead, focus on attractive finance schemes and an enhanced digital experience.

If you’re a would-be car buyer and you’re expecting to get eye-popping discounts, offers and freebies this festive season, you’re probably in for a disappointment.

Pandemic-hit auto majors are likely to set aside these time-tested strategies for now, and, instead, focus on attractive finance schemes and an enhanced digital experience.

 

On an average, festivals - from Ganesh Chaturthi right up to Diwali - account for anywhere between 17 and 19 per cent of the annual sales of passenger car makers.

But officials at auto companies say that it is a tight-rope walk for them this year.

“It is a litmus test for marketers. They will have to come up with innovative means to promote and sell their cars this festive season, as there is limited provision for discounts and incentives,” says Shashank Srivastava, executive director, sales and marketing, Maruti Suzuki India.

According to Srivastava, car makers have to ensure that the demand momentum, which kicked in from June this year, gathers pace and sales rise at a faster clip.

But companies have to do this at a fraction of last year’s marketing budgets, since cash conservation tops their priority list this year.

The task, say experts, is not only to recoup the first quarter’s volume loss, but also bring it on a par with last year’s festive season sales.

This is a challenge, given that consumers remain prudent with their household expenditure amidst the uncertainty induced by the pandemic.

Still, auto makers are doing what they can to woo buyers. Maruti, which has no major launches lined up for the festive season, plans to fully digitise car financing by offering end-to-end solutions.

This will ensure that buyers do not have to visit a bank to complete the loan process.

Starting from selecting the finance scheme to getting the approvals and having the loan disbursed to them - everything will be done digitally.

“Until now, finance has not been a part of the carmakers’ ecosystem,” says Srivastava.

Under the new e-finance option, which is currently in a pilot phase, everything can be done with a few clicks from the safety of the consumer’s home, he says.

Kavan Mukhtyar, partner and leader, automotive, at consultancy firm PWC, says car makers have an uphill task this festive season - revive sales at all costs, given that the first three months of the current fiscal were lost.

“One can therefore expect sales this festive season to surpass last year’s,” says Mukhtyar.

While full-year sales will still see a drop of 20 per cent versus last year, car makers would at least have recovered some ground if festive season sales click this year, he says.

Moreover, most car companies are likely to reduce their spends on print and television advertising, increasing their bet on digital advertising instead, he adds.

Experts say that a combination of pent-up demand and the need to own a personal vehicle amidst the health crisis has fuelled auto sales since June.

Hence, some analysts and industry executives argue that companies need not resort to desperate sales measures this festive season.

“Given that there is a surge in demand, we do not see the need to offer any extra discounts.

"In fact, we believe that across the industry, the consumer offers will be similar or lower than last year," says Veejay Nakra chief executive, auto division, Mahindra and Mahindra (M&M).

Tarun Garg, director, sales and marketing at Hyundai Motor India, is even more confident.

“For us, the festivals have started even before the season began,” he said, alluding to the good response received for Hyundai’s newly launched models, including the Creta, Verna and Aura.

In August, Hyundai has already reached 100 per cent of last year’s average in terms of sales, claims Garg, adding that sales are in an “auto-pilot mode” and that there is no need for an additional push.

Even so, for cost-effectiveness and better results, Hyundai has enhanced the share of digital in its overall media mix, says Garg.

M&M, too, has come up with several digital interventions across the purchase cycle.

This is to ensure that apart from maintaining social distancing, the company is able to reach out to its customers in a cost-effective way.

Photograph: William DeShazer/Reuters

Shally Seth Mohile in Mumbai
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