Carmakers Revive Discounts and Expansion Strategies to Revitalize Sales

In a bid to revitalize sales and clear record-high inventory levels, carmakers in Mumbai have hit the accelerator on discounts and freebies after a three-year hiatus. With dealership stocks soaring to an unprecedented 310,000 vehicles at the fiscal year's onset, companies are pulling out all the stops to attract new buyers and reignite demand.

The surge in inventory has prompted automakers to venture into smaller towns and cities, signaling a potential price war on the horizon, as multiple car retailers and industry insiders revealed to ET.

This resurgence of discounts marks the potential onset of the first price war post-pandemic easing. Although car sales saw a surge during the pandemic, production disruptions caused by chip shortages led to extended waiting lists for customers and a suspension of discounts.

Leading the charge, market leader Maruti Suzuki is offering substantial benefits on select models, with discounts of up to Rs 68,000 on popular SUVs and hatchbacks. Other manufacturers like Tata Motors and Hyundai Motor India are following suit, slashing prices and offering consumer benefits of up to Rs 50,000 and Rs 48,000 respectively on various models.

Industry estimates peg the average discount across companies at 2.5-3% of the ex-showroom price, reflecting a concerted effort to stimulate demand and clear excess inventory.

The inventory buildup was fueled by restocking activities in the March quarter following significant destocking in the preceding quarter to accommodate 2024 models. This oversupply has left dealers saddled with 2023 models, prompting them to offer steep discounts to liquidate stock.

Despite the inventory challenges, the Society of Indian Automobile Manufacturers (SIAM) has forecasted a modest 3-5% growth in domestic passenger vehicle sales for the fiscal year. However, some players like Mahindra & Mahindra are optimistic about outpacing industry growth, foreseeing double-digit growth in mid-to-high teens.

While established players continue routine network expansion efforts, newer entrants like Kia and MG Motor India are aggressively expanding their presence, aiming to rebound sales. Kia plans to ramp up touchpoints from 522 to 700 across 300 cities, while MG Motor India targets expanding from 380 to 520 touchpoints in 270 cities.

In parallel, MG Motor India also aims to significantly boost its manufacturing capacity, scaling up from over 100,000 vehicles annually to potentially 300,000 vehicles, underlining its commitment to the Indian market.

Similarly, Maruti Suzuki remains steadfast in its network expansion efforts, aiming to add 250 sales outlets annually over the next few years to bolster sales volume.

However, with most car models readily available and subdued customer orders amidst high inventory levels, any slowdown in retail sales could soon reverberate into wholesales, caution industry insiders.

As carmakers navigate the terrain of discounts, expansion, and inventory management, the industry braces for an exciting yet challenging fiscal year ahead, where adaptation and agility will be key to staying ahead of the curve.

Amidst the flurry of discounts and expansion strategies, carmakers are also gearing up to navigate the evolving landscape of consumer preferences and market dynamics. The resurgence of discounts and freebies underscores the industry's resilience and adaptability in the face of challenges such as supply chain disruptions and fluctuating demand patterns.

Furthermore, the emphasis on expanding sales networks reflects a strategic shift towards capturing untapped markets and strengthening brand presence across diverse geographies. For newer entrants like Kia and MG Motor India, this expansion serves as a pivotal opportunity to carve out a larger share of the market and establish themselves as formidable contenders in India's competitive automotive landscape.

The concerted efforts by industry stalwarts like Maruti Suzuki to sustain momentum in network expansion underscore their commitment to maintaining market leadership and driving sustained growth in the long term. By bolstering their sales infrastructure and enhancing accessibility for customers, these companies aim to fortify their position and capitalize on emerging opportunities.

However, as the industry braces for a period of heightened competition and market uncertainty, maintaining a delicate balance between inventory management, pricing strategies, and customer engagement will be paramount. Car manufacturers must remain agile and responsive to evolving market dynamics, leveraging data-driven insights and innovative marketing approaches to stay ahead of the curve.

In conclusion, the revival of discounts and expansion strategies by carmakers signals a dynamic shift in the automotive landscape, characterized by fierce competition and strategic maneuvering. As the industry navigates through challenges and opportunities alike, the coming fiscal year promises to be a defining period marked by resilience, innovation, and adaptation.