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Stimulating Sales


According to the Society of Indian Automobile Manufacturers (SIAM), car sales saw a drop of 21% in May this year, the sharpest in a month since September 2001. The past year has seen a decline of around 8 percent. Companies have cut down on production by as much as 20% and inventories have expanded. Experts attribute to this to a number of factors that have motivated manufacturers to make changes suited to the market of the future. This involves phasing out diesel cars, and introducing technology to meet required emission standards that have jumped from BS IV to BS VI. The state of the economy is also being blamed. The consensus is that the consumer’s purchasing power has come down owing to a number of factors going back to the implementation of demonetisation. The target consumer base may not have shrunk but it has many more options for utilising its disposable income. The Government’s decision to maintain fuel prices at a certain level and to allow diesel prices to come at par with petrol has also had a role to play. Companies have been trying a number of things to attract customers but they do not seem to have identified what exactly would be in demand. The emphasis on power, speed and the creature comforts does not seem to impress customers. Cars associated with status too have not quite hit the mark. In the big cities, the young upcoming professionals have seen changes in lifestyles that do not require ownership of cars. The introduction of Uber and Ola services has also made an impact as they prove cheaper than maintaining a car. The hassle of finding places to park makes driving cars a serious headache that comes on top of negotiating through increasingly maddening traffic. Although, India has a very low per capita ownership of cars, the roads are overcrowded and obviously lack the capacity to cope with an expansion in ownership. Wherever public transport, particularly metro services, has shown improvement, the compulsion to drive is diminished. The only remaining motivating factor is the ‘status’ earned from owning cars – one of the reasons why the eminently practical Nano car did not quite take off. The advanced technologies that go into cars nowadays also make maintenance a difficult task, with roadside garages and mechanics not having the appropriate equipment and having to depend increasingly on ‘jugaad’. Even a simple matter as getting a dent repaired can take a disproportionate amount of time. This obviously indicates a transitional phase. The automobile companies will have to anticipate the changing patterns if they wish to stay ahead of the loop, or they will end up getting as antiquated as the Ambassador.