MoTown India runs into muted sale season; dispatches drop as retail pick-up drags even after steep discounts

Indian automobile industry is seeing a slowdown after a period of high demand following the Covid-19 pandemic, ToI reported on October 15 citing SIAM data. Automobile companies are reducing the number of vehicles dispatched to dealerships as buyers are showing caution in their spending, despite significant discounts, said the report (by Pankaj Doval).

According to the Society of Indian Automobile Manufacturers (Siam), passenger vehicle dispatches decreased by 2% in the second quarter of the current fiscal year. Companies typically build up inventory before the festive season during this time, but dispatches dropped to 10.5 lakh units, down from 10.7 lakh units in the same period last fiscal year.

For the first half of the fiscal year (April-September), dispatches rose marginally by 0.5%, reaching 20.8 lakh units compared to 20.7 lakh units in the year-ago period.

Shailesh Chandra, President of Siam and Managing Director for Passenger Vehicles and Electric Mobility at Tata Motors, said the industry may see low single-digit growth this year. “The first half for the passenger vehicles industry has been flat, and even if we grow by over 5% in the second, we will end up at sub-5% for the full year,” Chandra stated.

Siam had initially predicted a growth range of 5% to 8% for the passenger vehicles sector at the beginning of this fiscal year.

Manufacturers like Maruti Suzuki, Hyundai, and Tata Motors have reduced dealer dispatches in recent months. For Maruti, which is unusual to decrease wholesales before major festivals like Navratri, Diwali, and Dussehra, the cut has been termed as “recalibration of its inventory” by Partho Banerjee, Senior Executive Officer (sales and marketing).Higher base demand from the previous year, driven by pent-up demand, is cited by the industry as a reason for the diluted growth percentages this year. Chandra added, “The decline during the second quarter was driven by slow consumer demand and seasonal factors. In contrast, industry offtake was significantly higher than registrations in anticipation of a strong start to the festive season, resulting in a continued buildup of channel stock.”