It's a long wait for key car models this festive season

A number of cars such as Maruti’s Dzire and Ritz, Honda’s City, Hyundai’s i20 and Toyota’s Fortuner SUV have been wiped off shelves in past 10 days and are not available for immediate delivery as demand frenzy during the ongoing festival season has led to stock out situation for car dealers.

Carmakers are now being forced to ramp up production to meet demand. For instance, Maruti has re-jigged its operations to produce more of its newer cars such as Ritz, Estilo, Swift and DZire, while Honda has hiked production of its flagship sedan City and General Motors is operating its factory on all seven days to meet the market demand for small car Spark, utility vehicle Tavera and Aveo sedan even though Sunday is weekly off for the company. The festive season has also put other cars such as Hyundai’s I10 and Toyota’s Innova besides Mahindra and Mahindra’s Xylo out of dealer stock.

Auto industry executives say that the dual-combination of the prevailing festival mood and the slew of new car launches in recent past has contributed to the high sales in the past two weeks. “The interest rates, which are at the lowest level since the past two years is also pushing up volumes,” said Shashank Srivastava chief general manager (marketing) at Maruti. Maruti is slated to end up with despatches of over 5,500 Ritz cars in September as against the monthly average of 4500-5000, it was delivering to dealers every month.

Besides sudden jump in demand there is also a supply lag for these cars. Companies usually ramp up production of new cars over a period depending on demand. Since there has been a sudden jump in demand during the festive period companies were not prepared to churn out the required number of these models.

Unlike older more established products such as Maruti’s Alto or Wagon R, where discounts and freebies up to 15% of the value of the car are given the newer models have much lower discounts. The demand rush during the auspicious Navratara and Dusshera festivals have resulted in the huge waiting period of up to three months on such cars — some of which are leaders in their respective segment.

“There has been much more sales than we had expected. Most of our cars like Tavera, Spark LPG, Aveo sedan have wiped off from the showrooms and are enjoy a waiting of four to six-weeks,” said General Motors vice-president (marketing & sales) Ankush Arora said.

Domestic car market is expected to scale new sales graph for the fiscal in September on the back of this huge demand. This would help the industry surpass the mark of 1.2 lakh cars that were sold in August in India.

Besides general demand, return of easy financing could also have helped spur demand. “We are anticipating a double digit growth in sales over the last year in September with market leaders like Maruti Suzuki and Hyundai their highest sales in the domestic market,” HDFC Bank auto loan head Ashok Khanna said. Earlier, most private sector financiers had tightened their auto loan portfolio which had also led to slow growth in demand.