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File photo of a factory worker at a car assembly plant. (REUTERS)
File photo of a factory worker at a car assembly plant. (REUTERS)

With festive period coming to a close, real test for Indian auto industry begins

  • Demand for passenger vehicles and two-wheelers may see a sharp fall now that festive period has drawn to a close.
  • While some say that the momentum in sales may last till November end, December could be the biggest challenge this year.

It has been a massively challenging year for the global auto industry at large and the Indian automotive sector in particular. While 2019 had its own sets of obstacles, any hopes of 2020 bringing respite was thrown out at high speeds by the Covid-19 pandemic and the consequent lockdown and restrictions. The last several months have seen an uptick in demand but with the end of the festive period in the country, the road ahead may get a whole lot tougher.

Car and two-wheeler makers have been busy rolling out products and accompanying offers to make the most of the festive period that stretched across two months this year. The Navaratri, Dusshera and Diwali time frame saw most OEMs getting more traction than they had in previous months but while the November sales period will only be known at the end of the month, market watchers are serving reminders that the year-end period could dampen spirits.

The post-Diwali phase each year does see demand and sales cooling down after the peak during festival times. As the calendar year draws to a close, new launch schedules are also mostly over with OEMs sitting down to chart out strategy for the upcoming year. The somber mood may be more somber this year than before considering all that 2020 has seen so far and the rising number of Covid-19 cases in many parts.

Pent-up demand, offers and new product launches were the three primary engines of a surge in sales since around August. Analysts now say that the peak reached due to these three factors is now over and there may not be much bang to end the year with. In fact, Nissan Magnite is the only major launch left in the year as far as the passenger vehicle segment is concerned. When HT Auto had asked a Nissan India official about putting off Magnite launch till after Diwali, he had said it is the product that counts and not when it is launched. "Magnite is a strong product offering and we expect it to do exceedingly well on its own merit, regardless of its launch schedule," he had said.

Magnite, scheduled for a launch late this month, may or may not be an exception but timing is crucial in the Indian automotive market which has seen several big-ticket launches this year despite the challenges at ground level.

Rajiv Bajaj, for instance, had previously said that one festive period doesn't help the two-wheeler industry. ""If you speak of retails from the dealers to the customers, frankly we are all still waiting and watching. There is still a bit of a struggle. One festive month doesn't make a year's worth of sales," he had told a news channel earlier this month.

In December of 2019, most car makers had posted negative growth in comparison to the same month in 2018. The transition from BS 4 to BS 6 was underway and factors such has heavy discounting and low base were blamed. This December may dole out its own set of challenges as some say dip in demand is likely to be sharper.

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