MUMBAI: Car sales from manufacturers to dealers are expected to stage a rebound this month, as dealers took on new stocks after clearing out a huge inventory pile-up during December. After a 14% drop in so-called primary sales in December, car manufacturers now hope to see a 8-10% growth this month, say officials at two leading car companies.
Last month, dealers offered huge discounts to woo customers and clear their inventory ahead of the year-end. This resulted in many of them taking fewer stocks from manufacturers, and in turn forced several car makers to temporarily shut plants and cut production by 25% to 30%.
“Currently, most dealers have zero inventory,” said Gautam Modi of Modi Hyundai, a Mumbai-based dealer for the South Korean car company. Another official at a New Delhi-based Maruti dealer said January had seen a replenishment of stocks. “This month was a mere stock correction. Since dealers have to maintain a minimum stock of 200-300 cars at any point of time, we were able to get cars from the manufacturers this month,” the official said.
However, industry officials familiar with the situation say secondary sales from dealers to customers have yet to pick up this month. While enquiries and customer traffic to showrooms have increased in the past one week, it has yet to translate into sales. Dealers say that some customers stayed away from making new purchases this month because of what they called “an inauspicious period’ in the Hindu calender.
Meanwhile, discounts have been reduced by more than 50% this month, and manufacturers have also hiked prices by 2-3%. Prices of small cars are up by around Rs 2000 and are around Rs 20,000 higher for bigger sedans. “Increasing discounts will not help sales unless interest rates come down and the availability of funds in the system improves” said Rajiv Dube, president for passenger vehicles at Tata Motors.
The car market, which saw double-digit growth for nearly five years in a row till 2007, has slowed to single-digits since January 2008. Car sales have been hit by high interest rates and the general liquidity crunch led to an increase in the cash amount buyers had to stump up even while availing loans.
The proportion of cars bought using financing fell to 59% in December 2008 compared with 78% of all sales in the corresponding year-earlier period. Volume players such as Tata Motors, Hyundai and Maruti-Suzuki are finding it tough to sell cars amid the economic slowdown, and much of their sales growth is coming from the huge discounts and subventions being offered by manufacturers, dealers and financiers.
Source: http://economictimes.indiatimes.com/News/News_By_Industry/Auto/Car_majors_see_10_rise_in_Jan_primary_sales/articleshow/4049833.cms
Last month, dealers offered huge discounts to woo customers and clear their inventory ahead of the year-end. This resulted in many of them taking fewer stocks from manufacturers, and in turn forced several car makers to temporarily shut plants and cut production by 25% to 30%.
“Currently, most dealers have zero inventory,” said Gautam Modi of Modi Hyundai, a Mumbai-based dealer for the South Korean car company. Another official at a New Delhi-based Maruti dealer said January had seen a replenishment of stocks. “This month was a mere stock correction. Since dealers have to maintain a minimum stock of 200-300 cars at any point of time, we were able to get cars from the manufacturers this month,” the official said.
However, industry officials familiar with the situation say secondary sales from dealers to customers have yet to pick up this month. While enquiries and customer traffic to showrooms have increased in the past one week, it has yet to translate into sales. Dealers say that some customers stayed away from making new purchases this month because of what they called “an inauspicious period’ in the Hindu calender.
Meanwhile, discounts have been reduced by more than 50% this month, and manufacturers have also hiked prices by 2-3%. Prices of small cars are up by around Rs 2000 and are around Rs 20,000 higher for bigger sedans. “Increasing discounts will not help sales unless interest rates come down and the availability of funds in the system improves” said Rajiv Dube, president for passenger vehicles at Tata Motors.
The car market, which saw double-digit growth for nearly five years in a row till 2007, has slowed to single-digits since January 2008. Car sales have been hit by high interest rates and the general liquidity crunch led to an increase in the cash amount buyers had to stump up even while availing loans.
The proportion of cars bought using financing fell to 59% in December 2008 compared with 78% of all sales in the corresponding year-earlier period. Volume players such as Tata Motors, Hyundai and Maruti-Suzuki are finding it tough to sell cars amid the economic slowdown, and much of their sales growth is coming from the huge discounts and subventions being offered by manufacturers, dealers and financiers.
Source: http://economictimes.indiatimes.com/News/News_By_Industry/Auto/Car_majors_see_10_rise_in_Jan_primary_sales/articleshow/4049833.cms
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