Friday, Dec 19, 2014

First-time car buyers shy away as growth, salary hikes elude

Rising prices of the fuel have led to the share of new diesel car sales fall to 12-13% in Q4FY14 itself. Rising prices of the fuel have led to the share of new diesel car sales fall to 12-13% in Q4FY14 itself.
New Delhi | Posted: April 26, 2014 12:01 pm

The share of first-time buyers of new cars in the country has dropped sharply to 37% from around 50% two years back, indicating poor growth in terms of new jobs and salaries for young professionals, a top official with Maruti Suzuki said in an investor call on Wednesday.

This worrying trend is a direct fallout of slowing macro-economic growth over the last few years and higher interest rates, which is leading to a drop in disposable incomes and adversely affecting consumer sentiment.

“In the last two years, the share of first-time buyers came down from 50% to 37%. North and east markets are performing better than south and west,” Mayank Pareeek, Maruti’s COO for marketing & sales, said.

In fact, rising prices of the fuel have led to the share of new diesel car sales fall to 12-13% in Q4FY14 itself. “A year back, diesel cars accounted for about 56% of industry volumes and, today, it is down to 52%. The shift is happening very fast,” RC Bhargava, Maruti chairman said at a press conference.

Maruti feels that despite a cut in excise duty in February this year, the market has not reacted as strongly as expected. “April will not be very good in terms of volumes. But one month is not enough to get an idea for the rest of the year. We expect consumer sentiment to improve after the new government takes charge,” Pareek said at the press conference.

To encourage potential customers, Maruti will focus on new models, new technologies and entry into new segments to both protect and grow its market share over the next few years. While the Celerio’s successful Automated Manual Transmission technology will be introduced in other models, the company will also launch a crossover, compact SUV, larger MPV and an LCV in the next 2-3 years.

“Our initial focus is to get as many AMTs as we can. We want to run this first in the entire compact car portfolio. based on the experience here we will move to other areas,” Pareek said.

- Rachit Vats & Roudra Bhattacharya

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