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Dealers struggling with decline in automobile sales for 3-4 months

The dealers of cars and bikes are having a tough time because automobile sales have declined by 20% at least compared to the previous year. It is the slowing economy, which has caused the drop in auto sales. For few brands, Gudi Padwa did bring a bit of revival, but no sooner than the festival was over, the sales have become weak again

15th April 2019, 03:41 Hrs

Karan Sehgal  

All across Goa the automobile dealers have been grappling with sluggish sales of cars and bikes for the last 3 to 4 months. Certain brands like Hyundai are offering huge discounts with exchange offers, but even such offers have not brought in as many customers as they had expected.  

Two-wheeler dealers of brands like Honda are giving offers to attract customers, but such offers are resulting in a decline in their own margins. After facing slowdown for last few months, the auto dealers are now hoping that the festivals like Akshaya Tritiya and Easter will revive the market.  

Prashant Joshi, President, Goa Automobile Dealers Association, said, “We have seen 15-20% decline in car sales, across all brands in the State. Customers are coming to buy cars, but the sales are lower than our expectations.”  

The economy is going through a slowdown in Goa ever since demonetisation was announced more than two years ago. After that the State witnessed mining shutdown, which was followed by a very poor tourism season in late 2018 and early 2019. As a result, customers don’t have adequate cash to buy cars and bikes.  

Evencio Quadros, chairman and managing director, Quadros Motors, said, “Even the established auto brands have seen a drop of 15-20% in their sales compared to the previous year. But, in the case of new brands, the decline is as high as 30%. Due to economic situation, the purchasing power of customers has come down. The impact of demonetisation and goods-and-services-tax (GST) is still being felt.”  

Quadros is the dealer of two-wheeler brands like Vespa, Yamaha, Suzuki and Jawa Motorcycles. He has recently launched the showroom of Jawa Motorcycles in Caranzalem. A lot of people were eagerly waiting for Jawa bikes in Goa and as a result already 600 bookings have been made, which will be delivered in 6 to 9 months.  

Despite good response, Quadros said the slowdown in auto sales has been such that he is not sure whether there will be growth in the sales of Jawa Motorcycles next year or not. Other two-wheeler brands are also bearing the brunt of slowdown.  

Vinay Kunkolienkar from Goa Rajee (dealers of Honda two-wheelers) said, “The decline in two-wheeler sales started in December 2018, which was the worst month for us. Subsequent to that, the sales did not recover in January to March. For six days around Gudi Padwa, two-wheeler sales recovered, however, now the sales are in decline mode again.”  

Traditionally in Goa, a lot of people used to buy cars and bikes on the auspicious occasion of Gudi Padwa. But this year, even this festival could not really bring any sort of revival in plunging auto sales.  

Kunkolienkar continued, “We are giving a free helmet costing Rs 780 to customers financing their two-wheeler purchase from Indusland Bank or Sriram Finance. We have cut down our commissions for such offers in the hope that more customers will buy.”  

Hyundai is offering Rs 91,000 discount on the purchase of an i10 car, Rs 2 lakhs discount on the purchase of Elantra and a discount of Rs 1 lakh on the purchase of Tucson. These discounts are applicable if an old car is exchanged on the purchase of a new one.  

Few brands have attractive offers, but there are other brands, which are not providing any offers to the customers too. Sources further hinted that interest rates on car-loans are pretty high at 9 to 10% per annum, which could also be discouraging customers from making a purchase.  

But the predominant reason in Goa for decline in auto sales is slowing economy. Kunkolienkar said that in Sanvordem the decline in two-wheelers is as high as 30% due to mining shutdown.   

Tejasavi Pai, vice-president, Chowgule Industries (dealers of Maruti Suzuki) said, “Elections are approaching and a lot of customers are thinking that the government may make some changes, which may change the price as well. So, they are postponing the purchase. The months of January and February were not good from the viewpoint of auto sales. March was better, but the sales are again weak in April.”  

Pai further said that her dealership delivered 180 cars on the occasion of Gudi Padwa, but after that, the sentiment has again turned weak for auto sales.   

It remains to be seen what happens to auto prices after the elections. But, it seems unlikely that the sales will totally recover anytime soon. There could be few months of a breather, though. For example: the dealers are expecting a revival in auto sales in April and May due to festivals like Ram-Navmi, Easter and Akshaya Tritiya. However, the overall trend will not become positive until and unless the economy recovers in Goa and in larger India.

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