The domestic automobile industry is in the pincer grip of a slowdown in sales that shows no sign of abating. But if you are a car buyer, things have never been so good.
With little room for expansion, brands are eating into each other's pie, with new launches upstaging established favourites. As a result, discounts, already high, are likely to get even better.
Be it the Renault Duster last year, the Honda Amaze two months ago or the recently-launched Ford EcoSport, each new car has made a direct — and negative — impact on old brands. And the heat is being felt across segments.
"The profile of the Amaze customer is not just those who were mulling a Dzire but also small cars such as the Swift and the i20, and even multi-utility vehicles such as the Ertiga," said Jnaneswar Sen, senior vice-president, Honda Cars India.
And the EcoSport is likely to singe one of the biggest success stories of last year, the Renault Duster.
“The EcoSport will attract people from across segments---small cars, premium hatchbacks, compact and executive sedans and of course sports utility vehicles,” said Joginder Singh, president, Ford India. In a sales war, cannibalism is perfectly acceptable.
Passenger car sales have been declining for eight straight months now, the worst stretch ever. Inventories have piled up, factory output has declined and lay-offs - unthinkable till last year - have begun. All this has forced companies to offer more discounts on old products, even at the cost of profitability. But even that does not seem to help.
"The sales decline is despite automakers and dealers offering very high discounts. Dealer inventories of major brands are at a level of seven to eight weeks now," said Rakesh Batra, partner and national leader, automotive practice EY. "Industry profits are likely to remain squeezed amid increasing costs and low capacity utilisation. High discounts are likely to be necessary to push vehicle sales until there are signs of recovery in demand.”