Takuya Tsumura, chief executive of Honda Cars IndiaIndian automakers are offering increasing discounts on new vehicles every month to combat weak consumer sentiment, generating "artificial demand", said Takuya Tsumura, chief executive of Honda Cars India.
Speaking to ET, Tsumura said while the domestic industry expected sluggish sales at the start of this fiscal year due to the general election, sales are still struggling to recover fully.
Car sales have grown marginally so far this year due to price discounts, he said.
"What is happening compared to last year is that the industry has additional one month stock. More supply (is) happening. So actual demand is one month lower than last year. Certain OEMs (original equipment manufacturers) are trying to manage that stock level, but the demand is, anyway, not so strong," Tsumura said on Wednesday on the sidelines of the launch of its Amaze compact sedan at a starting dealership price of about ₹7.99 lakh.
Around 313,000 cars, sedans and utility vehicles were sold in November, falling 13% from a year earlier, and 34% from October this year, according to data from the Vahan portal of the ministry of road, transport & highways (MoRTH).
In addition to fading post-pandemic pent-up demand, buyers are deferring new car purchases due to slowing economic activity. "Demand is slowing down, plus huge discounts are happening in the industry. So, artificial demand was created in the last 3-4 months," said Tsumura.
Honda introduced the facelift version of the Amaze, which will be competing with models such as market leader Maruti Suzuki's new DZire that went on sale last month. As much as 50% of Amaze customers are first-time buyers.
Kunal Behl, vice-president (marketing and sales), Honda Cars India, informed, "If you look at the passenger vehicle segment, hatchbacks, lower sedan and entry SUVs are all in the same price bracket. And we have over 38 models in this whole price range. Now, in the hatchback segment, degrowth is quite massive, whereas the lower sedan has seen about 2% CAGR in the last five years. This gives us confidence that Indian consumers are upgrading to a three-box sedan car."
According to Behl, hatchback sales fell 22% during April to November 2024 while entry-sedans recorded a much lower 4% decline. "In the overall market, fresh demand is not there, but the biggest impact has come to the hatchback, whereas the low sedan is still holding it. So, we believe the same is bound to grow," he said.
Honda Cars India is looking at doubling its portfolio by introducing three new models over the next two years. These would include an all-new SUV and the electric version of its midsize SUV Elevate.
The company currently has only one offering in the fast-growing SUV segment-Elevate. "We want to reinforce our lineup in the future. And, of course, we would like to meet the needs of Indian customersm," Tsumura said.
