Why is it not a good time to buy a car?

By the end of September, summer starts giving way to the fall. The pleasant weather also ushers in harvesting and festival season in the entire country-- which starts with Onam and Navratri and goes on till Diwali. People go on shopping spree, flooding markets and shopping malls. Online purchases also hit the peak during this period. Mobile phones, TVs, fridges, washing machines sell like hot cakes due to the irresistible offers. But what about cars?

Hit hard by pandemic, passenger-vehicle makers were waiting for the festival season for more than one reason. First, they expect to see record volumes. Second, they expect a swift recovery in their profitability to pre-Covid levels.

CRISIL Research says that cumulative retail sales in October and November are expected to touch a record 650,000-700,000 units. And dispatches to dealers are expected to cross a million units in the September quarter. But there is a spoiler. 

The waiting game

The good news may not extend to you, the buyer. Across brands, the average waiting period for popular models is about three to four months. This suggests that there may be more buyers chasing new cars than the carmakers can supply. Shortage of chips and pent-up demand in the wake of the Covid-19 pandemic are the reasons.

Expect limited discounts & offers

So, buyers should expect limited discounts and offers. And, offers will mostly be limited to vehicles seeing low demand, such as some entry-level hatchback models. In the beginning of September, the industry was estimated to have about 700,000 pending bookings, with Maruti Suzuki alone accounting for 377,500 units. 

The likely trend

So what will be the trend this festival season? There will be strong demand for top-end trims on the one hand, and negligible discounts on select models on the other. The sales trend till August indicates that while the growth momentum has continued for SUVs, it has hit a plateau for sedans. So, those looking for discounts may want to try their luck with the latter.

So, how much can you expect to save even where discounts are on offer? 

An analysis of available reports on recent offers shows that you may bag discounts ranging from Rs 20,000 to Rs 45,000, that too depending on the model and trim. Finance schemes and exchange bonus benefits will also be there. But, that is a far cry from past festival season sops. Discounts on passenger vehicles had reportedly gone up to 1 lakh rupees for some models in 2019. Even where discounts are on offer, they are small for the most part. 

Mahindra, which only recently started deliveries of the Scorpio N, has bookings for 100,000 units. And, depending on the variant, the waiting period is 70 to 90 weeks. There is not much incentive then to offer good discounts.

In the beginning of September, Autocar India reported that Honda was offering discounts and benefits on its fourth and fifth-generation City, Amaze, Jazz and WR-V models. The fifth-generation Honda City, a midsize sedan, got the most discounts. On offer were either a cash discount of Rs 5,000 or free accessories worth Rs 5,496. A discount of Rs 5,000 and a bonus of Rs 7,000 was also on offer on car exchange. However, no discounts were on offer on the City Hybrid.

Right before the start of the festival season, Maruti Suzuki offered discounts on the Ciaz, XL6 and Ignis. It is offering benefits of up to Rs 48,000 for all variants of the Ciaz sedan. The Ciaz saw a 29 per cent year-on-year drop in sales in August 2022. It was also Maurti's worst-selling model that month, accounting for just 1.13 per cent of total units sold across models. 

For Ignis, a small hatchback, the automaker is giving a consumer offer of up to Rs 10,000 and an exchange offer of up to Rs 15,000. Maruti Suzuki has also been offering heavy discounts on Celerio, S-Presso and Dzire in September.

Tata Motors has also come out with offers for Navratri, Dussehra and Diwali. But, it is offering discounts on five models, which are the Tata Harrier, Tata Safari, Tata Tiago, Tata Tigor and Tata Nexon. Including cash benefits, exchange bonuses and corporate discounts, buyers can expect a discount of up to Rs 40,000 on these cars.

The discounts on Tata Motors’ most-selling SUV, the Nexon, may interest you the most. A total of 20,000 rupees in discount is on offer for the SUV. The company is also offering a 15,000 rupees exchange bonus on its diesel variant, along with a corporate discount of 5,000 rupees. These offers come at a time when Tata Motors is shifting its focus to electric vehicles, targeting a five-fold rise in their sales by FY24.

Puneet Gupta, Director - S&P Global Mobility, Automotive Sales Forecast India & ASEAN says inventory with dealers down to 25 days from 45-60 days. New models seeing three-month waiting period. Low dealer stock, long waiting period mean no discounts

On their part, carmakers cannot breathe easy just yet. Experts see the boom led by pent-up demand ending in some months. Going forward, their performance will also depend on how production pans out against the underlying demand.

With discounts off the table, buyers will have to be content with the fact that automakers are diligently trying to at least bring down the long waiting periods on the cars they seek to buy.