With pent-up demand diluted, carmakers and dealers are also increasing marketing spends to draw buyers to showrooms this festive season. New Delhi: Nearly a dozen consumer and automobile companies, such as Nestle, Colgate-Palmolive, Godrej Consumer Products, Maruti Suzuki, Volkswagen, Skoda and Tata Motors, have stepped up advertising and marketing spends in September quarter, and some of them said they will continue to increase spending through the December quarter to help revive demand.
Toothpaste maker Colgate increased marketing and ad spending by 17.8% in the July-September period to ₹242 crore and expects the momentum to continue, while Godrej Consumer Products said in a post-earnings call that it will continue to incrementally increase ad spends as it did in the past quarter. Colgate in a management commentary said a step up in ad spends, which were nearly a percentage point higher from a year earlier, were on account of innovation in the quarter.
Nestle India increased advertising and marketing investments in the September quarter. "We kept a relentless focus on investing behind our core brands, with advertising and marketing investments increasing this quarter," Nestle India chairman Suresh Narayanan said in an earnings statement. Addressing reporters at Nestle's Samalakha factory last week, Narayanan said the company is "taking steps to address pockets of weakness and mitigate local competition with higher ad spends".
Hindustan Unilever, Nestle, Tata Consumer, Godrej Consumer Products and Dabur are among the large companies that have called out to demand stress in urban cities on account of surging costs of food and fuel, while adding that rural demand is recovering. Packaged consumer goods makers, on average, spend 6-12% of their revenue on advertising and promotions.
With pent-up demand diluted, carmakers and dealers are also increasing marketing spends to draw buyers to showrooms this festive season. Industry stakeholders ET spoke with said there multiple national as well as regional campaigns have been released by companies as part of efforts to reduce elevated stock levels. Spending in the rest of the quarter, though, will depend on the stocks remaining after the festivals.
Maruti Suzuki, Volkswagen, Skoda and Tata Motors are among automakers that have increased tactical spends ahead of this festive season, industry sources said. "Overall marketing expenses rose last quarter because discounts are very high. Ad spends are at similar levels as last year, as there are pressures on budgets because of these incentives. Companies are channelling resources from brand awareness campaigns to marketing campaigns," a second industry executive said. While spending on TV has declined, that on print and radio ads has gone up, this executive said.
"Spends on marketing campaigns, in other words tactical spends, are higher than last year. Spends on vehicle launches, though, are lower because the number of new models introduced this year are lesser," a senior industry executive said. Tactical spends are contributing to 40% of ad spends for automobile industry, he added. On Monday, the Ministry of Finance noted in its monthly economic review bulletin that there is evidence of a slowdown in urban demand through the performance of various indicators during the first half of fiscal 2025.
"Volume growth in urban FMCG sales has moderated from 10.1% in the first quarter of FY24 to 2.8% in Q1 FY25. As per FADA (Federation Of Automobile Dealers Associations), auto sales fell 2.3% in H1 FY25, due to lower sales in Q2 of FY25 vs Q2 FY24 in urban areas. Housing sales and launches declined in Q2 of FY25. The above trends may be largely explained by softening consumer sentiments," the ministry said.
