Car Manufacturers Slash Prices Amid Surplus Inventory
There are times when companies like Maruti, Mahindra, and Tata Motors announce heavy discounts based on their customer performance. Following the shortage of customers and rising inventories at dealerships, these top brands have decided to offer huge discounts and offers to attract new customers. This presents a great opportunity for people who are waiting for the perfect time to purchase a car. Additionally, the Mahindra XUV700, Tata Harrier, and Safari are also experiencing notable price reductions.
Dealers are currently managing an unusually high inventory, with stock levels equating to 65-67 days of sales, more than double the typical amount. To counter this, manufacturers have introduced attractive schemes to draw buyers into showrooms ahead of the festive season. With growth slowing and inventories rising, Tata Motors and Mahindra & Mahindra have entered a price war, offering significant discounts on their flagship SUVs. For instance, Tata Motors has cut prices on the Harrier by Rs 50,000 and on the Safari by Rs 70,000, depending on the model. In response, Mahindra has offered a temporary price reduction of up to Rs 2 lakh on the XUV700's premium AX7 models, describing this move as a strategy to lower the average price point and stimulate growth.
Despite these discounts, sales have been lukewarm. Tata's flagship SUVs saw sales drop from over 2,500 units in January 2024 to around 1,000 units in June. Similarly, sales of the XUV700 declined from around 7,200 units in January to 5,900 units in June, leading to a reduction in production from the planned 10,000 units per month to 6,000-7,000 units. Maruti Suzuki has been offering various discounts through its Arena and Nexa outlets since January 2024. The brand introduced the Dream series lineup last month, attracting around 21,000 bookings. The Dream Edition includes entry-level models like the Alto K10, S-Presso, and Celerio, starting at Rs 4.50 lakh (ex-showroom) with additional equipment.
Hyundai continues to see strong sales for its best-selling model, the Creta. However, models like the Alcazar and Exter are experiencing a drop in demand. The brand recently launched the Exter Knight Edition and Exter Hy-CNG Duo to boost sales while offering discounts of Rs 10,000-20,000 on the standard Exter for several months. The Alcazar faces a facelift launch with discounts of up to Rs 80,000. The Venue offers discounts of up to Rs 55,000, while the Grand i10 NIOS and i20 come with benefits of up to Rs 50,000. German brands like Volkswagen and Skoda are offering substantial discounts and benefits of over Rs 1.5 lakh on most of their India 2.0 lineup. Honda is providing benefits of around Rs 70,000 on the Elevate, which saw sales drop from 4,500 units in January to 2,100 units in June. The City also offers benefits of around Rs 1 lakh, with the Hybrid version coming with higher discounts.
Industry experts note that the current discounting trend is a response to a lean season and aims to start the festive season on a positive note. Nikunj Sanghi attributes this situation to seasonal low demand due to the rainy season and rural India's sowing period. Manish Raj Singhania expressed concerns about the Rs 60,000 crore worth of inventory in dealer networks across India. With passenger vehicle inventory levels at an all-time high of 62-67 days, market dynamics have shifted from supply-driven to demand-driven, leading to increased discounts. Passenger vehicle dispatches from original equipment manufacturers (OEMs) were highest in May this year at 3.47 lakh units but showed moderate growth of only 3.9%. High dispatches caused a demand-supply mismatch, which dealers hope will be corrected through ongoing discounts. Top car makers anticipate a moderation in demand after two years of strong pent-up demand. It remains uncertain if these price corrections will persist or if there will be a significant increase in demand during the second half of this year.
To summarize, The current market scenario has led to a unique opportunity for car buyers in India. With major car brands slashing prices to clear out their high inventory levels, potential buyers can benefit from substantial discounts on various popular models. However, the future of these discounts remains uncertain, depending on how the market responds in the coming months. For now, consumers can take advantage of these offers and potentially drive home a new car at a significantly reduced price.
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