Will the festive boost to sales last?

Auto firms hope to sustain demand

Even as they hope to sustain the momentum in the market, with new launches and associated measures, automotive companies are cautiously optimistic about the demand scenario in the post-festive season.

It is estimated that more than 2.7 lakh cars were sold in October, helped by the pent-up demand and festive season sales. Companies said this was remarkable, as three months back, no one could forecast that the market would bounce back to this level. However, they are sceptical about the outlook, for the next few quarters.

“We are cautiously optimistic right now in terms of demand outlook, because it is pent-up demand, mixed with some people buying vehicles for different reasons, including physical distancing,” said Santosh Iyer, vice-president (sales and marketing), Mercedez-Benz India, while participating in the 3rd Conversation, organised as part of the ‘Tamil Nadu Smiling’ campaign of The Hindu Group. The topic of discussion was: “Will the automobile sector regain its mojo this festive season?”

Mr. Iyer was of the view that manufacturers with new products or refreshes in their portfolio would still be able to excite the market and get some replacement demand in. “We are seeing that in the case of GLS SUV, priced at over ₹1 crore. It was launched in July. Even now, we have three months’ waiting period for the car, in these times. And these are good three-digit numbers. Thus, new models clearly excite the market and we will continue to do that,” he added.

On government support measures, he felt there had been indirect measures to support the auto sector, unlike in some other countries, where interventions were direct to stimulate demand immediately. Measures such as scrappage policy will spur good demand, he said.

N. Sundararaman, head of marketing at Bajaj Auto, said there was a need to pep up consumer sentiments, which were depressed due to factors like the health crisis and reduction in income.

He added that there was no big surge in sales due to personal mobility, as cited by projections. Bajaj Auto’s own research indicated that less than one third of the people stated the reason as personal mobility.

“I think the introduction of new launches has been good for us. But in the overall pie, we are cautiously optimistic,” he added.

“There is definitely a good revival from a disbursements perspective. We are expecting that this festival season will bring in a little more demand. In our business, almost 90% of our moratorium customers have started paying their EMI. This was in September, and we saw further improvements in October and November. I think the recovery is coming,” said D. Arulselvan, executive V-P and CFO, Cholamandalam Investment & Finance Company Ltd.

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