After Maruti and Hyundai, Tata Motors offers discounts as car makers get squeezed between slow sales and slower registrations

After Maruti and Hyundai, Tata Motors offers discounts as car makers get squeezed between slow sales and slower registrations
MARUTI STOCKYARD IN MANESAR AS SEEN FROM KASANBCCL
  • Car makers in India are offering deep discounts to woo buyers.
  • Car sales have been slow for a while now; they fell 15% last financial year.
  • While dealers have reopened, the registration of new vehicles has been too slow.
  • At the current rate, car sales for the year are expected to fall as much as 25% forcing companies to rollout discounts.
A 15% decline in car sales last financial year, zero sales in April, and a tepid recovery in May⁠— the woes of Indian car makers seem far from over. Now, they are forced to offer deep discounts to boost sales.

These are the discounts offered on various models from Tata motors, Maruti suzuki, Hyundai and Honda:

HyundaiDiscountMaruti SuzukiDiscount
Grand i10 NIOS₹ 25,000Dzire₹ 55,000
Santro₹ 30,000Swift₹ 50,000
Elite i20₹ 35,000Celerio & S-Presso₹ 48,000
Grand i10₹ 60,000Wagon R & Eeco₹ 33,000
Elantra SedanUpto ₹1 lakhAlto₹ 38,000

Tata MotorsDiscountHondaDiscount
Tigor₹ 45,000Amaze ₹32,000
Nexon₹ 3,000City - SV (MT), V (MT), and V (CVT) ₹45,000
Harrier₹ 45,000City VX (MT) ₹68,000
Tiago₹ 28,000City VX (CVT), ZX (MT), ZX (CVT)up to ₹1 lakh

Falling car sales has been a problem for India’s car makers for over a year now⁠— passenger vehicle sales fell 15% in the financial year ending March 2020.
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Just last month, Maruti Chairman RC Bhargava said that discounts won’t be necessary. But he had to eat his words in less than a month as companies faced yet another issue.

Vehicle registrations in India declined almost 89% on a year-on-year basis to 2 lakh units as compared to 18 lakh units last year during the same period, according to the data from Federation of Automobile Dealers Associations (FADA).

Registration in the three-wheeler and commercial vehicles saw the steepest decline of nearly 96.34% and 96.63% respectively.
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After Maruti and Hyundai, Tata Motors offers discounts as car makers get squeezed between slow sales and slower registrations
BI india

Usually, the possibility of delay in delivery is likely to push buyers to defer the purchase. According to FADA, the first 10 days of June witnessed extremely low demand despite most dealerships being open for business.

The problems piling up took a toll on auto stocks. Maruti and Tata Motors who lost more over 4% value in trade today. Maruti, India’s largest car maker erased the gains made this month so far.

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StocksDec 31-June 11
Maruti Suzuki-25.11%
Bajaj Auto-14.32%
Hero MotoCorp-4.69%
Mahindra & Mahindra Limited-11%
Tata Motors-41%

Hopes clouded

Almost 74% of the over 1,100 respondents in a survey, conducted by professional services giant EY, said that owning a car will become a priority for them post the COVID-19 lockdown. About one in every four didn’t own a car yet.

But the mood on the ground is a lot more gloomy. Many people have lost their jobs, many more have seen salary cuts, and the overall economy is expected to decline 5.2%, according to the latest World Bank estimate. “Overall outlook continues to be grim with projected sales to witness a de-growth upwards of 25% YoY," said the report.

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Ratings agency Crisil had a similar estimate. Passenger vehicle sales may fall anywhere between 22% to 25% between April 2020 and March 2021. Car makers are likely to get more desperate.

SEE ALSO: Maruti Suzuki saw a sales decline of 16% in Jan-March⁠— investors wait to see the margin squeeze

Hero Motocorp share price plummets 2% after its lowest profit in at least the last six quarters
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