Our industry checks suggest that passenger cars have an advantage over twowheelers in terms of demand revival, given the Sixth Pay Commission benefits, new model launches and availability of vehicle finance. Maruti Suzuki and Mahindra & Mahindra remain our top picks. Sell Hero Honda and Tata Motors.
We visited dealers around Mumbai city to get a sense of vehicle demand ahead of the peaksales festival season. Below we outline our key takeaways.
Passenger cars: long waiting period for new models
Maruti Suzuki
.. The company has initiated targeted marketing to gain from the Sixth Pay Commission payout for central government employees. It has asked dealers to recruit four-member teams to restart the ‘Wheels of India’ promotion and target government employees. Dealers expect special schemes to be launched, and hope to get a better market share given limited direct competition in this user segment.
.. The waiting period for Maruti diesel cars has risen to 4-6 months. The recent launch of the Tata Indica Vista has had no impact.
.. The impact of Hyundai’s i10 kappa engine and General Motors’ Spark is limited, as these models also have a waiting period.
.. The effective interest rate for consumers has increased from 12% before the Sixth Pay Commission payouts to 13.5%. ICICI Bank is pushing for floating interest rates for car loans, but customers have been trying to avoid these.
.. Finance availability is tough due to the strict implementation of SIBAL, wherein poor credit history leads to delays in approvals as either the consumer has to get it rectified or senior bank officials have to clear it as an exception with an appropriate explanation.
.. The Zen Estilo seems to be the weakest in Maruti’s portfolio, as its discounts have been higher than for the Wagon R and volumes lower.
.. Inventories are 1.5-1.8x above normal, which may be used up during the festival period. But if demand fails to revive, it may create problems in November-December 2008.
We visited dealers around Mumbai city to get a sense of vehicle demand ahead of the peaksales festival season. Below we outline our key takeaways.
Passenger cars: long waiting period for new models
Maruti Suzuki
.. The company has initiated targeted marketing to gain from the Sixth Pay Commission payout for central government employees. It has asked dealers to recruit four-member teams to restart the ‘Wheels of India’ promotion and target government employees. Dealers expect special schemes to be launched, and hope to get a better market share given limited direct competition in this user segment.
.. The waiting period for Maruti diesel cars has risen to 4-6 months. The recent launch of the Tata Indica Vista has had no impact.
.. The impact of Hyundai’s i10 kappa engine and General Motors’ Spark is limited, as these models also have a waiting period.
.. The effective interest rate for consumers has increased from 12% before the Sixth Pay Commission payouts to 13.5%. ICICI Bank is pushing for floating interest rates for car loans, but customers have been trying to avoid these.
.. Finance availability is tough due to the strict implementation of SIBAL, wherein poor credit history leads to delays in approvals as either the consumer has to get it rectified or senior bank officials have to clear it as an exception with an appropriate explanation.
.. The Zen Estilo seems to be the weakest in Maruti’s portfolio, as its discounts have been higher than for the Wagon R and volumes lower.
.. Inventories are 1.5-1.8x above normal, which may be used up during the festival period. But if demand fails to revive, it may create problems in November-December 2008.
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