Retail car sales sees low demand in run up to Diwali this year despite discounts

Key highlights:

• In the run up to Diwali car sales grew by 12-14%
• This is in comparison to an almost 20% growth during the same period last year
• Retail car sales during the week before Diwali accounts for 25-30% of the total sales for the year

This Diwali has far from being a happy one for car manufacturers as retail sales seems to have seen a much smaller growth in compared to the previous year. In the run up to Diwali car sales grew by 12-14%, instead of the almost 20% growth during the same period last year, according to a Financial Express report.

The retail car sales during the week before Diwali accounts for 25-30% of the total sales for the year. This is as most of the new cars are purchased during the festive period.

The growth of 12-14% in terms of retail car sales is very well below the 20% growth that is seen during this time of the year.

This poor sales at the retail level is expected to then be passed on the car manufacturers as wary retailers have not added enough stock to their existing inventory.

The report said that car dealers are however relieved that retail sales picked up after Navratri after being subdued for two months.

Added to this, dealers are also wary of a slowdown in car sales from November with Diwali coming to an end and as a result have not added enough new stock to the existing inventory.

The reason for this poor show in car sales is the introduction of the recent Goods and Service Tax (GST). Most car companies push their inventory into the market after the implementation of GST, despite retail sales being very low.

Several car manufacturers including Maruti Suzuki, Hyundai, Mahindra & Mahindra, Tata Motors and Honda Cars had seen a record number of sales at the wholesale level to dealerships from July. These car companies also offered several discounts to push the sales of these cars.

Car companies offer discounts of up to Rs 1 lakh in anticipation of good Diwali sales