Is COVID-19 helping small cars, otherwise overshadowed by the likes of SUVs, make a comeback?
It may seem so if auto sales data of May is taken as an indicator. show that social distancing norms may have fueled demand for small cars as first-time car buyers came to the market.
Car makers including Maruti Suzuki, Hyundai and Mahindra have indicated slight preference for small cars among buyers last month. While these could have been fueled by first time car buyers, the three companies said that these are ‘early days’ and ‘difficult to state if the trend will continue in June’.
First week of May saw reopening of dealerships after being shut for more than 40 days following lockdown orders from the Centre. Sales activities commenced on a restricted note adhering to social distancing guidelines and showroom sanitation. Even today only 70-85 percent of car showrooms in India are operational as per estimates provided by car manufacturers.
Before entertaining requests for fresh booking dealers were tasked to deliver vehicles to waiting customers, which were booked before the lockdown, during May.
For Maruti Suzuki, India’s largest carmaker, first-time buyers make up 40-41 percent of total sales. A dealer source said: “First time buyer has increased from 38 percent to 67 percent”. The company clocked domestic sales of 13,865 units during May.
Senior executives speaking to the media and analysts during May had mentioned that there has been an increase in enquiries for small cars after the reopening.
The average domestic monthly sales done by the maker of Swift and Baleno as of last year stood at 1.17 lakh units. About 62 percent of Maruti’s sales come from urban centers. Almost half of its buyers are the salaried class.
Korea auto brand Hyundai which has opened 85 percent of its dealerships had seen a higher than expected booking rates for the Elite i20 and Grand i10 Nios, as per sources. Both cars are defined as small cars since their length is not more than 4 meters.
The company sold 6,883 units in the domestic market during May to dealers but around 11,000 cars were delivered to customers during the same month. Hyundai’s average monthly domestic sales last year stood at 40,500 units.
In a statement Tarun Garg, Director (Sales, Marketing & Service), Hyundai Motor India, said: “In an extremely challenging market environment, Hyundai made a humble beginning towards normalcy. This performance was made possible on account of Hyundai recorded strong customer interest and demand pull for Creta, Verna, Venue, Elite 20 and Grand i10 Nios.”
Hyundai received close to 15,000 customer bookings across models. More than 850 Hyundai showrooms (dealerships and rural sales outlets) and almost 1,000 workshops have opened across India.
Sport utility vehicle-specialist Mahindra & Mahindra sold 3,867 units during May. The average monthly domestic sales done by M&M in the passenger vehicle segment stood at 15,500 units last year. The Mumbai-based company, which has opened 70 percent of its dealerships, too acknowledged a growth in demand for entry products like Bolero.
Veejay Nakra, Chief Executive Officer, Automotive Division, M&M said: “Our performance during May has been muted, due to the challenges the industry is facing. We have opened 70 percent of our dealerships and retail sales have begun. We are seeing initial traction for our small commercial vehicles and SUV brands such as the Bolero and Scorpio.”
Toyota, the maker of Fortuner and Land Cruiser, sold 1,639 units in May. Most of the sales in May comprised of pending orders it had received before the lockdown. The company does not have any small cars after the phase out of the Etios Liva. About 60 percent of its dealerships were operational by end of May.
Naveen Soni, Sr. Vice President, Sales & Service, Toyota Kirloskar said: “The market has been slow and with demand being less, we have been able to wholesale only 20 percent of what we would have clocked under a normal situation. However, retail sales have been much higher when compared to wholesales, thereby helping us reduce the month closing inventory levels at dealerships. We have also seen a significant surge in customer orders and enquiries online, through digital platforms.”
MG Motor India recorded retail sales of 710 units in May from 65 percent of its dealerships. The carmaker has resumed production at its Halol manufacturing plant with approximately 30 percent capacity utilisation amidst supply chain constraints.