New Launches Help Companies Buck Slowdown in Auto Sales
The auto sector has been impacted by low demand, high-interest costs and ever-increasing cost pressure due to heavy discounting.
Image used for representative purpose. (Photo: Reuters)
Bucking the slowdown trend in the auto industry, new products by a few carmakers have seen accelerated sales in an overall subdued off-take environment. New entrant MG Motors has recorded over 12,000 bookings for its first offering Hector, while Hyundai's Venue received 39,000 bookings and has a waiting period of 2-3 months depending on the variant and colour. Interestingly, both vehicles have sport internet-enabled smart communication and entertainment features.
"The novelty factor of the new models often results in increased demand in the initial stages. But sustainability is determined by market dynamics. We have observed that once the initial euphoria dies down, new models see a drop in sales, especially during a slowdown," said Sridhar V., Partner, Grant Thornton India.
The auto sector has been impacted by low demand, high-interest costs and ever-increasing cost pressure due to heavy discounting. Besides OEMs, the whole gamut of the industry including its retail arm is feeling the heat.
Passenger car sales were down 26.03 per cent to 147,546 units in the month of May. In such a subdued environment, the strategy of introducing new products to boost sales assumes significance.
"It is similar to the one used by the smartphone industry, where new features, upgraded technology, right positioning, nice aesthetics/design and pricing are the key drivers for sales," said another industry observer.
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