Carmakers Expect Demand To Pick Up In Festive Season Even As COVID-19 Shadow Looms Large
A customer, right, enters a Maruti Suzuki India Ltd. S-Cross car for a test drive outside the company’s showroom in the Ambattur district of Chennai, India. (Photographer: Dhiraj Singh/Bloomberg)

Carmakers Expect Demand To Pick Up In Festive Season Even As COVID-19 Shadow Looms Large

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Leading automakers Maruti Suzuki India, Honda and Tata Motors expect sales to pick up during the festive season, although there is uncertainty about their performance this year on account of COVID-19 pandemic.

The country's largest carmaker Maruti Suzuki has seen sales improve month-on-month from May till July, and expects offtake to remain robust during August as well.

The auto major, however, feels that the festive season demand would depend on the COVID-19 situation.

"We are relieved that sales bounce back has happened but we will have to wait and watch because a lot of this demand will be pent-up demand and we will have to see how steady the demand would turn out to be," MSI Executive Director Sales and Marketing Shashank Srivastava told PTI in an interview.

"I think it will depend on the economy and Covid scenario because car buying is a discretionary purchase and requires positive sentiment," Srivastava added.

If COVID-19 situation improves, it would lead to improved sales and if somehow the scenario deteriorates then the sales would also be impacted, he noted.

Srivastava said the festive season generally brings good sales as people are more inclined towards spending during the period.

"That is why demand is more in festive season. So in any year festive season is one of the better month for sales, but however this year we would expect festive season to be good but then we are very careful in making this conclusion as you can also have negative sentiment coming from COVID-19," Srivastava said.

In any case, the company is ramping up production to cater to demand, Srivastava said.

The carmaker has seen steady demand from rural areas in the last few months and expects the trend to continue in the remainder of the financial year.

"Rural sales now account for 40 per cent of the total sales. In fact we are now also witnessing revival in urban centres as well," Srivastava said.

Similarly, Honda Cars India Ltd Senior Vice President and Director-Marketing & Sales Rajesh Goel said the company is optimistic about the upcoming festive period and expects demand to improve, further supporting retail sales.

"Ever since lockdown opened up, we have been focusing on new launches and refreshments in existing models including all new City,WR-V and Jazz to be ready for the festive season.

"All these new models have helped us create fresh excitement in the market and evoke customer interest. The response to our launches has been very encouraging and we hope this trend will grow in the coming months," he said.

The propensity of local governments to introduce mini-lockdowns to curb the spread of the virus is proving to be a challenge, according to Goel. But, 95% of the company’s dealerships are currently open. Of these, Goel expects the ones in smaller towns and rural markets to perform better, as buyer sentiment in these areas is positive, and Covid-19 has had less of an impact.

The good rabi crop production and favourable monsoon will surely drive the demand in these regions, he added.

On company's preparations for the festive season, Goel said the carmaker is already in the process of ramping up production and hopes to reach 100% of pre-COVID level by September.

The company is all set to introduce refreshed version of its hatchback Jazz, for which bookings are already open.

Tata Motors said this year's festive season is going to be an important time for the auto industry as customers will be looking to make big-ticket purchases post the lockdown.

"Despite the slowdown caused by the pandemic, this year's festive season has already begun on a positive note for the company. Our market share has already doubled after the first quarter of this financial year to 9.5%, as compared to same time last year," Tata Motors Passenger Vehicle Business Unit Head, Marketing Vivek Srivatsa said.

Keeping in mind that the coronavirus pandemic has made customers reluctant about venturing out, a primary challenge would be to urge the customers to visit company's showrooms and dealerships, he said.

"To address this,our approach this festive season will be to focus more on safety along with the positivity of festivals as a theme to communicate with our customers," Srivatsa said.

The challenge going forward will be to drive up demand using marketing led initiatives, he said.

While demand is growing when compared to the initial months when the pandemic struck, most customers still want to wait and watch, and the most important challenge being faced by all brands currently is to assure their customers about sanitisation and safety, Srivatsa said.

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