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car sales: Entry-level vehicles ready for a grand ride as festivities begin

The hatchback cars and affordable non-electric motorcycles and scooters will sell well in the coming months as India gears up to celebrate its first ‘normal’ festive season after a two-year hiatus. An “above normal” monsoon, positive consumer confidence and a generally optimistic mood are also expected to boost entry-level sales.

Vehicle manufacturers, for their part, are making aggressive plans with a focus on attractive discounts and new products to turn requests into sales.

Manufacturers such as Maruti Suzuki, Hero Motocorp and Honda Motorcycle & Scooter India (HMSI) are betting big on the festive take-off, with more than half of the pent-up demand for entry-level two-wheelers and cars expected to be released during the festive season this year.

They say a significant percentage of buyers, especially in the hatchback segment, are first-time buyers and many of them are in the B&C cities category.

“For these buyers, purchasing a car is a major milestone in their life journey and they naturally want to start such milestones at a favorable time,” said Shashank Srivastava, senior executive director at Maruti Suzuki. “Normally, festivals are occasions where families expect to celebrate and taking home a new car is definitely a celebration.”

Positive sentiment

As automakers line up new products for launch during the season, banks, both public and private, are working on offers and incentives to attract customers as they see a surge in demand for private loans.

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“We expect momentum to build in the coming months thanks to a combination of multiple factors, including healthy growth in the country’s GDP, a normal festive season after a two-year hiatus, better monsoons resulting in a decent agricultural harvest and positive consumer sentiment said a spokesperson for Hero MotoCorp.

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The car market has recovered well from the Covid impact with the reopening of schools and offices. However, factors such as compliance standards and increases in raw material and fuel prices have led to an increase in the cost of ownership for automotive customers.

This impacted demand, especially in the entry-level automotive segment, and contributed significantly to subdued two-wheeler sales, said Atsushi Ogata, managing director, president & CEO at HMSI. “With this in mind, we are approaching the holiday season. While the season has certainly set the tone for us, we are confident that the coming months will provide balanced growth,” said Ogata.

Sales of entry-level cars have lagged lately. But between April and August of this year, they registered a marginal increase of 0.88% year-on-year, with Maruti Suzuki accounting for 90% of sales. Maruti Suzuki sells Alto and S Presso in this segment.

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The entry-level motorcycle segment, the largest contributor to total motorcycle sales, was led by Hero Motocorp, with Splendor and Deluxe sales growing 18% over the period, according to the latest SIAM data.

Dealers also expect an improvement in retail sales of entry-level motorcycles during the holiday season. “The footfalls and demands have increased, but it has yet to translate into sales,” said Nikunj Sanghi, owner of Rajasthan-based JS Fourwheel Motors, which has piled up inventory of entry-level models as their supply has remained constant as demand has taken a hit. had received.

While sales during the holiday season are expected to grow 10-15% over the past year, they’re still not likely to hit pre-Covid levels anytime soon, two-wheel dealers said.

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Although the number of cars and two-wheelers per capita in India has steadily increased, there is still a lot of room for growth. According to estimates by consultancy Jato Dynamics, with a household count of 300 million, India had 22.5 million cars in 2019-20, a 1.5% increase from 2016; and 149 million two-wheelers, a 12% increase since 2016.

These segments have yet to become saturated and there is still a lot of growth potential, said Ravi Bhatia, president of Jato Dynamics.

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