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Car makers eye festive season to revive fortunes

By Sharmistha Mukherjee
September 13, 2014 12:19 IST
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Car makers are cautiously optimistic, even as two-wheeler firms are clearly upbeat.

After a two-year slowdown, car makers are looking forward to the festive season this year to trigger a sustained revival in demand.

Sales of passenger vehicles (PVs), overall, grew for a fourth straight month in August. However, it is only the bigger car makers such as Maruti Suzuki (MSIL), Hyundai Motor India (HMIL) and Honda Cars India which have registered strong double-digit growth this financial year. 

The recovery has mostly been sentiment-driven and car makers are hoping the festive season will stiffen volumes across manufacturers and segments.

Rakesh Srivastava, senior vice-president (marketing & sales), HMIL, said: “The past two years have been challenging. In the initial phases of revival, we saw growth was largely limited to a few established players. With overall sentiment and fundamentals of the economy improving, growth will percolate. We have seen a good start in Onam and Ganesh Chaturthi and we expect the momentum to continue.”

Hyundai expects the industry to close 2014-15 with growth in a high single digit. MSIL Chairman R C Bhargava, however, believes overall growth in the car market this year will not be higher than the five-six per cent predicted earlier. 

“The growth is not across manufacturers. Some of Maruti’s new launches helped it grow sales. But, generally, customers are not willing to take risks. They are playing safe and moving to products that are established and trusted,” he said.

For itself, buoyed by strong sales in the first five months of the financial year (April-August), Maruti Suzuki has scaled up its projection for growth in cars in FY15. Bhargava said, “We will surely have a double-digit growth rate this year. We had not expected more than seven or eight per cent growth till the general elections but our sales have grown at an average of 16 per cent in the past five months. I will, however, not like to predict whether the rate for the full year will be 12 per cent or 16 per cent.”

Honda Cars agrees the growth seen in the first few months has not been shared by all. Jnaneswar Sen, senior vice-president (marketing & sales), said: “The fact remains that people are buying more cars than last year. Growth is not shared by everybody but if the improved sentiments are followed by increase in GDP growth and moderation in inflation, there is enormous headroom to grow.”

Ford, which plans to launch four new products in the Indian market over the next 18-20 months, says the recovery is real but a sustained turnaround in demand might take a few months. 

Nigel Harris, president, Ford India, said: “There are positive signs but the turnaround is not strong enough. There are only four manufacturers, including us, which have seen year-on-year growth so far. Sustained demand growth is still some months away. The new government has been in office only for about 100 days now; people are still waiting. The spike during the festive season will be normal and not extra-ordinary.”

Sumit Sawhney, country chief executive and managing director, Renault India, is cautiously optimistic. “The momentum is there but people are still cautious. High discounting in on. It is true new brands have to work hard to gain customer trust and confidence. But what ultimately matters at the end of the day is the right product, as we have seen when we launched the Duster.” 

In the two-wheeler space, in contrast, the mood is clearly upbeat. Sales were up 15 per cent, at 6.6 million units, between April and August. 

Market leader Hero MotoCorp has readied for launch 12 refreshed products to cash on the festive season. Pawan Munjal, vice-chairman and managing director, said: “Our sales will be better than last year, when we sold around 600,000 units during the festive season.” 

His rival, Honda Motorcycle & Scooter India, which has had a good run so far, is tweaking production plans to cater to increased demand for its scooters this festive time. Yadvinder Singh Guleria, vice-president (marketing & sales), said: “We have an order backlog of 85,000 units, of which 65,000 are for scooters. We are running on full capacity. Customers prefer taking deliveries specially during the festive season and we are increasing scooter production by 15-20 per cent to meet their requirements.” 

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Sharmistha Mukherjee in New Delhi
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