It is that time of the year, when automotive brands try to make the most of it, through various sales and discounts. Industry experts point out that while automotive brands run several offers during the festive season including Dussehra and Diwali, the end-of-the-year sale has traditionally witnessed rather steep discounts. Moreover, car manufacturers further attempt to attract consumers to purchase before the upcoming post-Union Budget which could lead to price hikes. “The trial effect of car sales during Diwali has a significant impact on December month. Another aspect to consider is that December coincides with year-end bonuses and a general sense of optimism for the New Year. Recognising the heightened consumer engagement and purchasing intent during this period, automakers typically spike their advertising spend to ensure maximum reach and brand visibility,” Krishna Iyer, director – marketing, MullenLowe Lintas Group, told BrandWagon Online.
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India’s automotive market was valued at $100 billion in 2021 and is expected to reach $160 billion in 2027, thereby registering a compound annual growth rate (CAGR) of 8.1% over the forecast period (2022-2027), as per a report by Mordor Intelligence, a business intelligence platform. The report further claims that the Indian automotive market is reasonably concentrated, with the top five players accounting for most of the market share in all the segments. The major players in the passenger car segment include Maruti Suzuki, Tata Motors, Hyundai Motor, Mahinda and Mahindra, and Honda Motor.
There is no doubt that the sector is flourishing with each passing year, be it revenue, profit or spending on advertisements and promotions. For instance, Volkswagen increased its revenue from operations by 37.32% to Rs 17,041.72 crore in FY23 from Rs 12,410.48 crore in FY22, as per the regulatory filings accessed by business intelligence platform, Tofler. At the same time, the company’s profit after tax (PAT) grew by 32.68% to Rs 309.49 crore in FY23 from Rs 208.34 crore in FY22.
Meanwhile, Hyundai’s revenue from operations increased 27.29% to Rs 60,307.58 crore in FY23 from Rs 47,378.43 crore in FY22. The company’s PAT grew 62.29% to Rs 4,709.25 crore in FY23 from Rs 2,901.59 crore in FY22. “During the festive season beginning with Onam in the South and culminating with Diwali in November, cumulative retail sales was around 1,65,000 units and this number contributes about 28% to our annual retail sales,” Tarun Garg, COO, Hyundai Motor India, added.
Similarly, Honda reported a 14.04% increase in its revenue from operations to Rs 14,190.07 crore in FY23 from Rs 12,442.89 crore in FY22. It is to be noted that the company’s PAT grew 50X to Rs 1,430.97 crore in FY23 from Rs 230.25 crore in FY22.
Furthermore, Tata Motor’s revenue from operation increased 24.25% to Rs 3,45,966.97 crore in FY23 from Rs 2,78,453.62 crore in FY22. Interestingly, the company turned profitable at Rs 2,689.87 crore in FY23 from a net loss of Rs 11,308.76 crore, during the same period in the preceding year.
December delights!
After what appears to be a positive sales momentum during the on-going festive season it is now December which is expected to draw higher sales. All this is largely backed by an array of offers by dealers and brands. For instance, Honda is extending some of the offers this month on its cars which will be valid till the end of this month as there is going to be a price increase across cars from January due to input cost challenges. “This is the best time to own a new car. For our new SUV Elevate, we are implementing high visibility activation events across major markets to increase awareness and consideration for the new model among SUV intendors,” Kunal Behl, vice president – marketing and sales, Honda Cars India, claimed.
For Tata Motors, the festive period was good as the Vahaan registrations from Shradh to Diwali (47 days) were over 79,000 units, registering a growth of 18%, compared to last year’s festive period (48 days). “We saw a 15% increase in deliveries compared to the previous year, the response to our newly launched Nexon, Harrier, Safari and the iCNG range has been particularly gratifying. TML regained second position in the SUV segment in November 2023. Both Nexon and Punch remained top two selling SUVs in November 2023,” Vinay Pant, head-marketing, Tata Motors Passenger Vehicles, added.
December has also been a pivotal month claimed Volkswagen in terms of sales as it capitalises on the momentum of the festive period. Moreover, with year-end benefits customers tend to close their purchase decisions. The demand is further amplified by marketing initiatives for both the festive season and year-end offers. “At Volkswagen India, we have successfully driven campaigns such as Volksfest for the annual festive period and Big-Rush for the year-end offers for customers. With a widespread campaign across digital and mainline, we have focused on an almost equal split across platforms for maximum reach and coverage across the markets,” Ashish Gupta, brand director, Volkswagen Passenger Cars India, said. Meanwhile, Hyundai aims to end 2023 on a high note as it claims that its SUV EXTER has achieved a milestone of one lakh bookings.
Role of advertising and publicity…..
Much of these sales targets are achieved through marketing. And when it comes to the Indian landscape, emotions and traditions play a vital role in purchasing decisions, which can be often seen in campaigns released by auto brands. “Heartwarming stories and vibrant visuals resonate with consumers, creating a sense of connection and encouraging purchases. Limited-time discounts and exclusive deals add urgency and incentivise consumers to act. Car makers use every strategy available in the book to make their cars sell more,” Iyer explained.
This is further reflected in the increase in ad-spends year-on-year. Data from regulatory filings revealed that Hyundai’s ad spend grew 37.66% to Rs 677.13 crore in FY23 from Rs 491.89 crore. However, Honda’s spending increased marginally 5.92% to Rs 92.26 crore in FY23 from Rs 87.1 crore in FY22. While, Tata Motor’s marketing spend rose 24.09% to Rs 6,035.38 crore in FY23 from Rs 4,863.65 crore, during the same period, in the corresponding year. “Advertising and marketing play a crucial role in establishing brand recognition and shaping consumer attitudes. They contribute to the formation of a brand identity that sparks curiosity and influences consumer purchasing decisions,” Pant opined.
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