Automakers, hoping to attract new buyers and clear record inventory levels, have resumed offering discounts and freebies after a three-year hiatus. At the onset of the financial year, car dealership stock peaked at 310,000 vehicles, prompting companies to ramp up sales strategies by exploring new markets in smaller towns and cities. The surge in stock has instigated a competitive environment that could potentially lead to a price war in the automotive sector, stating multiple car retailers and executives to ET.

The current situation marks the resumption of sales promotions post the pandemic-induced automotive boom, which was subsequently hampered by chip shortages hampering production. Manufacturers have already rolled out consumer offers in April, unveiling various models with competitive discounts and benefits to entice potential buyers.

For instance, Maruti Suzuki, one of the market leaders, is offering benefits of up to Rs 68,000 on its models like the Grand Vitaraand Fronx compact SUV. Other manufacturers like Tata Motors and Hyundai Motor India are also introducing attractive offers to spur demand. The prevailing trend of discounts is estimated to average between 2.5-3% of the ex-showroom price across companies, thereby creating a more competitive landscape for buyers.

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After restocking inventories in recent quarters and transitioning to the new 2024 models, dealerships are now prioritizing the clearance of the previous year's stock with substantial discounts and promotional offers. The rapid turnaround in restocking has led to increased inventory levels, which manufacturers and dealers are aiming to systematically liquidate.

The overall industry outlook forecasts a 3-5% growth in domestic passenger vehicle sales, following a solid growth trajectory in the previous fiscal year. While industry projections vary, market participants like Mahindra & Mahindra remain optimistic about outperforming industry growth, while others adopt a cautious stance in light of the evolving market dynamics.

As automakers gear up for a new phase of growth in the competitive landscape, network expansion becomes a key priority for enhancing market penetration and brand visibility. Established manufacturers and new entrants alike are focusing on expanding touchpoints and after-sales services to cater to an evolving consumer base across tier-I, II, and upcountry markets. With both seasoned players and emerging brands vying for market share in a competitive environment, the automotive sector in India is set for an interesting trajectory of growth and innovation in the coming fiscal year.

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