Discount offers on sedans, hatches continue to pump up December ’22 car sales

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With carmakers announcing a price hike from January 1 2023, vehicle offtake at dealerships in December 2022 continue to be on the rise.

Data on the Vahan portal shows total volumes of the top five carmakers are inching close to 2,00,000 units, with Maruti at 99,777 units, Hyundai at 34,176 units, Tata Motors at 28,126 units, and Mahindra and Mahindra (M&M) at 37,670 units. The data is until the morning of December 27.

A senior executive at a car company said better promo levels and the expected price increases are reflected in the brisk retail sales. In his view, the industry retails can touch the 400,000 mark and the wholesale may be around 275,000 units.

According to the Federation of Automobile Dealers Association (FADA), the sales momentum is maintained because of the year-end discounts at OEMs rising to a four-year high.

Manish Singhania, president at FADA, told Moneycontrol, “OEMs are offering a huge discount and have even taken contributions from dealer margins. The average discounts have gone in the range of 5-7 percent of the book value.”

“Overall, the industry is looking positive in December and we do expect decent growth happening across segments. In the PV space, we expect a single digit YOY growth during this month,” he said.

It may be recalled that last year, the total number of passenger vehicle sales went down by 10 percent at 244,639 units.

Dissecting the discount pie

While entry-level models, such as Maruti Alto and Renault Kwid, are offered with discounts going up to 7 percent, certain subcompact and SUVs are having around 3-3.5 percent discount.  Furthermore, some dealerships are making the deal sweeter with benefits ranging from Rs 25,000-Rs 100,000, according to FADA.

“Every OEM, after increasing capacity and regularising semiconductor supplies, has certain models available as feeder stocks and are available off the shelves now,” added Singhania.

While there are enticing offers for hatchbacks and sedans, Sport Utility Vehicles (SUV), which command a huge waitlist, don’t have a discount of a single rupee.

“Since there is no waiting period for several compact and larger SUVs, such as the Brezza, Venue, Sonnet, Scorpio, Creta, Seltos and XUV700, there are no schemes on them,” said Singhania.

A Delhi-based Maruti Suzuki dealer told Moneycontrol that the CNG variants of Celerio and S-Presso CNG is offered with a price cut of Rs 60,000, and Rs 15,000-20,000 cut is offered for the manual version of Celerio and Rs 45,000 for S-Presso and Eeco by 10,000.

Likewise, WagonR is off by Rs 35,000 for CNG version, Rs 25,000 for both the petrol (manual) and AMT versions. Its 1200cc (petrol and AMT) model is also off by Rs 15,000. However, there is not a single rupee discount on Brezza and Ertiga, as indicated by the same dealer.

For Maruti Suzuki, the discount rates are on par with what was prevalent in 2018-19. As a result, the bookings are up by about 23 percent and enquiries about 15 percent higher, the company claims.

Shashank Srivastava, sales and marketing head at Maruti Suzuki, said, “The demand parameters of enquiries and bookings continue to be stable.”

“The inventory levels, at the beginning of December, reached the normal levels of around 25 days. Most OEMs and dealers would ideally like to have low levels of inventory in 2022 December-end and this explains the larger push for retails and the relatively less production and wholesale in this month,” he said.

Likewise, a Hyundai dealer said that the Grand i10 Nios could be cheaper by Rs 20,000-25,000 for the CNG variant and Rs 10,000 for the petrol variant. Hyundai Aura will be priced Rs 30,000 less for the CNG variant and by Rs 20,000 for the petrol version. There is also a discount offer of Rs 10,000-20,000 for the i20. However, there is no discount offer on the Venue and Creta, the dealer said. Hyundai Motor India didn’t respond to queries till the time of this report being published.

For Tata Motors’ Tigor, there is a discount offer of Rs 20,000 on the petrol variant and Rs 25,000 on the CNG variant. For Tiago’s CNG version, it is Rs 30,000, and for the petrol version, it is Rs 20,000.

The Altroz automatic would be cheaper by Rs 20,000 and the manual version by Rs 10,000 until December 31. However, there are no discounts on Punch, Nexon and other SUVs.  The company spokesperson was unavailable for comments due to the holiday break.

Says Puneet Gupta from S&P Automotive: “With GDP growth expected to be around 5.3 percent next year, automotive growth is expected to be in single digit in 2023, after a sizzling 23 percent growth in 2022.  Already, in the short term, there are signs of demand cooling off.”

“Discounts are back, and dealer follow-up calls, messages and test rides at dealerships now encourage the sales staff to go the extra mile to convert the enquiry into sales,” he said.