Several dealers and industry executives ET spoke to said discounts on vehicles have increased by 25-50% over the same period last year, with stocks in the channel burgeoning to 700,000 units after Diwali.
“It is not only small cars and sedans; base variants of SUVs have also started piling up. Discounts in the market were nominal in the last few years due to supply constraints. This year, with carmakers ramping up production, inventory has increased significantly. Promotional offers are the best-ever we have seen in the market since 2019,” said Manish Raj Singhania, president at industry body Federation of Automobile Dealers Associations (FADA).
Carmakers have not yet planned any production cut to balance inventory but annual maintenance shutdowns at companies like Maruti Suzuki later this month are expected to help pare dealer stocks, industry watchers said.
Meanwhile, automakers, along with dealers, are doling out attractive discounts to lure buyers. This includes lucrative interest rates, cash discounts, exchange bonuses, among others. While market leader Maruti Suzuki is offering incentives of up to ‘2.3 lakh across models from small car Celerio to SUV Jimny, Korean automaker Hyundai is extending benefits of up to ‘1.5 lakh on a range of vehicles, starting from hatchback Grand i10 Nios to SUV Tucson. Tata Motors has incentives of up to ‘1.4 lakh on SUVs like Harrier and Safari.
Honda Cars has offers running into ‘1 lakh on its flagship sedan City.Shashank Srivastava, senior executive officer (marketing and sales) at Maruti Suzuki, while conceding that stocks in the industry are on the higher side, said, “While wholesale will be lower (in December) compared to the average dispatches we have seen the last few months, retails will be strong. The heavy thrust on sales, promotional offers will help bring down inventory by month end.”Retail sales of vehicles are generally robust towards the year-end as carmakers tend to announce plans to hike prices in the new year. Sales jumped from 382,000 units in December 2018 to 410,000 units in December 2022.
Srivastava said consumers too would also want to take car deliveries ahead of any price increases in January. Carmakers across the board from Maruti Suzuki to Hyundai Motor India and Mahindra & Mahindra (M&M) have announced plans to raise vehicle prices in the new year, citing high input costs.
Tarun Garg, COO at Hyundai Motor India, said while the company has been making efforts to absorb cost escalations to the extent possible, it has become imperative to pass on some portion of the rising input cost to the market through a minor price increase. “The hike will be effective from January 1.”