Carmakers fear a slack festive season 2011


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It will be a sluggish festive season for car sales as high interest rates and petrol price are likely to keep the demand low, feel top manufacturers. Officials from companies like Maruti, Hyundai, Honda and Volkswagen said the market sentiment would continue to remain weak in the forthcoming festive season that begins at the end of this month.

"Ganesh chaturthi has not been very good despite heavy discounts. Even the indications are not very bullish," said Arvind Saxena, director (sales & marketing) at Hyundai India. Echoes Mayank Pareek, managing executive officer (sales & marketing), at Maruti Suzuki: "The high interest rates and steep petrol price are still there, and this is unfavourable. At the best, we expect sales during the festive season to be at the same level last year."

Monthly sales numbers support the pessimism. The top three carmakers - Maruti, Hyundai and Tata Motors - had a second consecutive month of negative sales last month. Overall, the car industry has been reeling under a slowdown, and those struggling include Ford and Fiat.

The gloom was unlikely to lift soon, said Neeraj Garg, director (passenger cars) at Volkswagen India. "The market is shrinking and will remain depressed. The festival season is definitely going to be tough." Volkswagen is set to offer limited-period special versions of its Polo hatchback and Vento sedan to attract people to showrooms. "There is hardly any traffic at dealerships."

Interest rates have been inching up at regular intervals as RBI continues with its hawkish approach to tame inflation. "Interest rates have gone up by almost 3% over the last eight to nine months and this is not a good signal. Dearer interest rates also affect home loan EMIs and squeeze the disposable incomes," said Jnaneswar Sen, Sr V-P (sales & marketing) at Honda Siel India.

Around 70% of car sales take place through the financing route, which have been under tremendous pressure due to higher EMIs. The steep inflation and choppy markets have only added to the negative sentiment. Pawan Goenka, outgoing president of industry body Society of Indian Automobile Manufacturers (Siam), has said it will further downgrade car sales growth forecast for this year from the existing 10%-11%. The original forecast was 16%-18% and Siam has been revising this with demand slackening.

Worst hit is the compact car segment, which is the most sensitive to the changes in interest rates. Any hit in this segment means a big erosion in industry volumes as this is the biggest segment in terms of sales. "We expect some pick up in demand, though the festive season may not be as good as last year," Sen said.

Anil Dua, Sr. V-P (marketing & sales) at Hero MotoCorp, said there were "concerns" over demand in the festive season. "We are taking note of the negative signals."

Carmakers fear a slack festive season - The Times of India [frustration]
 
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Its not just car sales, it will affect other sectors as well. Particularly, the real estate which is not regulated and highly corrupted process involving many middle men.
Even food inflation is also on the higher side. Fruits are now considered as luxury seeing the rates of each of them.

This is just squeezing the middle class to the core with EMIs all around.
 
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well if they are so fearful then why everyone increasing prices?!!
I think just to get some money. There will be some definite buyers at festive times.So companies wants to take advantage of this.Also increase some price and offer discounts so it feels like there is 'more' discount on car.Kind of a marketing trick IMO.
 
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