Buyer sentiment improves for automobiles, say dealers

Rise in sentiments follows a reduction in discounts on certain cars and SUVs

Car buyers are flocking again to showrooms, marking a steady increase in enquiry and booking levels in the past three weeks.

This reverses the weak consumer sentiment in the sector over the past 24 months. Dealers of cars and utility vehicles say buyers appear more confident in committing for a purchase than before the new government was formed at the Centre.

The pullback in demand and rise in sentiment is at a time when certain cars and sports utility vehicles have seen a reduction in discounts offered, a norm for the past several months to support retail buying.

John Paul, managing director, Popular Vehicles & Services, a major dealer for Maruti Suzuki, said: “Consumers are certainly upbeat this time and the change is visible. Buyers who were shying away are coming back. It is important that the trend continues even after June 30.”

Discounts fall

Discounts have come down by Rs 5,000-12,000 on small cars, said a dealer from this city. The four per cent excise duty cut announced during the interim budget by the Manmohan Singh government will be in effect only till the end of the this month.

The new government is expected to unveil its budget in the first week of July and there is no certainty that the cut will not be altered. Thus, to avoid running a risk of paying higher taxes after the new budget, dealers are expecting increased consumer interest in the next few days.

New models such as the Maruti Suzuki Celerio, Hyundai Grand i10 and Xcent, Toyota Etios Cross, Ford EcoSport and Honda City have outpaced sales in the rest of the sector.

Heightened demand has pushed the waiting period on the Celerio and the Xcent up to three months, said dealers.

Vinay Piparsania, executive director, marketing, Ford India, said: “A stable government is a positive development for overall economic and business sentiment. We are hopeful the new government will support ongoing industry-friendly initiatives like the excise duty reduction and look at further positive measures to improve consumer sentiment.”

V G Ramakrishnan, managing director (South Asia) and global leader, automotive practice, Frost and Sullivan, said: “We made a few visits to dealerships to check the sentiment. Not only was the showroom traffic more than the earlier weeks, there was a significant improvement in buyer sentiment.”

April saw a 10 per cent fall in passenger vehicle sales, including a 10 per cent slide in sales of cars and  27 per cent fall in vans, showed data supplied by the Society of Indian Automobile Manufacturers. However, sales rebounded to rise about seven per cent in May with market leader Maruti Suzuki growing 16 per cent.