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Major Car Brands Offer Significant Discounts Amid Inventory Surge
Low customer footfalls and rising dealer inventory have led major car manufacturers like Maruti Suzuki, Mahindra, and Tata Motors to offer significant discounts.
This has created an ideal time for buyers, with popular SUVs such as the Maruti Suzuki Brezza, Grand Vitara, and Honda Elevate seeing substantial price cuts. Additionally, the Mahindra XUV700, Tata Harrier, and Safari have also experienced notable price reductions.
Rising Inventory and Discount Strategies
Dealers are currently managing an inventory of around 65-67 days, which is more than double the usual levels. This situation has prompted manufacturers to introduce attractive schemes to draw buyers into showrooms even before the festive season begins.
As growth slows and inventories rise, Tata Motors and Mahindra & Mahindra have engaged in a price war, offering massive price cuts on their flagship SUVs.
Tata Motors has reduced prices on the Harrier by Rs 50,000/- and the Safari by Rs 70,000/-, depending on the model. In response, Mahindra offered a temporary price drop of up to Rs. 2 lakh on the XUV700's premium AX7 models. In a stock exchange filing, Mahindra clarified that this price cut is part of their business strategy to lower the average price point and drive growth.
Sales Trends and Manufacturer Responses
Despite these offers, sales responses have been lukewarm. Tata's flagship SUVs saw sales drop from over 2500 units in January 2024 to around 1,000 units in June.
Similarly, XUV700 sales declined from around 7200 units in January to 5900 units in June. Consequently, production of the vehicle decreased to 6000-7000 units from the planned 10,000 units per month.
Maruti Suzuki has been offering multiple discounts on its Arena and Nexa outlets since January 2024. The brand introduced the Dream series line-up last month, garnering around 21,000 bookings.
The Dream Edition includes entry-level models like the Alto K10, S-Presso, and Celerio starting at Rs 4.50 lakh (ex-showroom) with more equipment.
Discounts Across the Industry
Hyundai continues to see strong sales for its best-selling model Creta but models like the Alcazar and Exter are seeing a drop in demand. The brand recently launched the Exter Knight Edition and Exter Hy-CNG Duo in hopes of boosting sales while offering discounts of Rs 10,000-20,000/- on the standard Exter for months.
The Alcazar faces a facelift launch with massive discounts of up to Rs 80,000/-. The Venue gets discounts of up to Rs 55,000/-, while the Grand i10 NIOS and i20 offer benefits of up to Rs 50,000/-.
German brands like Volkswagen and Skoda are offering massive discounts and benefits of over Rs 1.5 lakh on most of their India 2.0 line-up. Honda is providing benefits of around Rs 70,000/- on the Elevate with sales dropping from 4500 units in January to 2100 units in June. The City also sees benefits of around Rs 1 lakh while the Hybrid comes with higher discounts.
Market Dynamics and Future Outlook
Industry experts note that current discounting trends respond to a lean season inventory correction and aim to start the festive season positively. Nikunj Sanghi attributes this situation to seasonal low demand due to rains and rural India's sowing season.
Manish Raj Singhania expressed concerns about Rs 60,000/- crore worth of inventory in dealer networks across India. With passenger vehicle inventory levels at an all-time high of 62-67 days market dynamics have shifted from supply-driven to demand-driven leading to increased discounts.
Passenger vehicle dispatches from OEMs were highest in May this year at Rs.3.47 lakh units but with moderate growth of only 3.9%. High dispatches caused a demand-supply mismatch which dealers hope will be corrected through ongoing discounts.
Top car makers anticipate demand moderation after two years of strong pent-up demand. It remains uncertain if these price corrections will persist or if there will be a significant pick-up in demand during the remaining half of this year.
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