Even if you are not planning to bring home a new ride, you must have read about the sudden surge in attractive discounts on various models of cars. For instance, Mahindra & Mahindra has announced price cuts of over Rs 2 lakh on select models of their range-topping variants of the XUV700.
This was followed by Tata Motors slashing prices of the Harrier and Safari SUVs by up to Rs 1.4 lakh. These are not the only cuts. Walk into any auto dealership of any brand and you are likely to encounter attractive offers on many vehicles. It is just that these discounts, unlike those on the Maruti Suzuki Jimny, are ‘unofficial’ and not public news.
There is intense speculation on the underlying causes behind the price cuts. Some attribute it to Uttar Pradesh government’s decision to waive registration duties on hybrid cars such as those from Honda, Maruti Suzuki, and Toyota.
However, because vehicles like the Toyota Innova Hycross are expensive and produced in limited quantities, any competitive pressure on Mahindra and Tata’s sales would likely be minimal. Therefore, these factors probably did not influence Mahindra and Tata’s decision to cut prices. Also, while Jimny sales have been tepid, even glacial, the XUV700 has been a runaway success, with Mahindra celebrating the SUV reaching 2,00,000 sales in just 33 months. The company even stated that these price cuts had been planned three months ago.
But planned price cuts seem almost bizarre, so why do it?
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Markets are cyclical
One reason for the price cuts across the board is that the runaway growth of the automotive industry after the Covid-induced lockdown has come to a screeching halt. On 10 July, the Society of Indian Automobile Manufacturers (SIAM) released industry sales and production numbers. Domestic sales of passenger vehicles from April to June 2024 stood at 10,26,006 units, compared to 9,96,565 units sold in the same period last year—a growth of under 3 per cent, far lower than the double-digit growth rates of the past couple of years.
But this did not come as a surprise. Executives from several car companies across various market segments have mentioned discussions about market softening. According to most, the reason is simply the end of the post-Covid demand cycle.
“You have to understand that all markets are cyclical, but I do believe the Indian economy will continue to grow, as will car sales but a bit slower this year,” a senior executive at a leading carmaker told me over an informal interaction.
“Growth will probably be low single-digits, but some segments will continue to grow, particularly at the higher-end of the market. Thus value-growth will be high, despite discounts.”
In fact, the executive said price cuts have been very variant-specific, due to what he described as a ‘run-out’—when a model is withdrawn or, more likely, replaced with a better variant, carmakers dispose of the stock. And, as a recent story in The Financial Express mentioned, there is a large inventory of unsold vehicles.
In mass-market cars, de-growth is clearly evident in the hatchback and sedan segments where sales have cratered. Maruti Suzuki, for example, saw sales of its entry-level Alto and S-Presso hatchbacks decline from 40,400 units in the April-June quarter last year to 30,816 units this year. However, the country’s leading carmaker more than made up for this with increased sales of its utility vehicles such as the Grand Vitara and Brezza, despite the Jimny lagging.
But even in utility vehicles, carmakers like Tata Motors have seen absolute sales numbers fall for all models except the Punch on a year-on-year basis. In fact, for Tata Motors, the main worrying trend ought to be the sharp decline indeed in sales of its electric passenger vehicles.
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Deals abound
That brings us to another reason sales have been tepid. Confusion among buyers, particularly thanks to the growing Electric Vehicle versus Hybrid debate.
And it’s not just a debate about ‘which technology’ to invest in but the fact that there is very limited choice for buyers in both segments currently—EV or hybrid.
“If you search on the internet, you can read that carmakers will be bringing in several new electric and hybrid vehicles in 2025, so unless one really, really needs to replace their vehicle, why buy a car now,” the executive told me.
It is true that Maruti Suzuki and Toyota will be flooding the market with new, strong hybrids in 2025-26. MG Motor, which recently signed a joint venture agreement with the Sajjan Jindal-led JSW Group, has highlighted opportunities in plug-in hybrid technology—hybrid vehicles with a slightly larger battery that can be charged like that of an electric vehicle.
At the same time, Hyundai and Kia plan to start selling their made-in-India electric vehicles from next year. For Kia Motors, these will almost certainly be the domestic versions of the newly launched EV3 and EV5. Buyers are hedging their bets and waiting for more choices at the car buffet.
If you are a buyer, there has never been a better time in almost five years to buy a car. This also means that the long waiting periods have come down sharply; in some cases, you can take delivery as soon as you complete the paperwork. But how long will this last? There is no telling, but with a flood of new launches in the coming months, things will likely skew even more toward the buyer in the short-term as carmakers with older models will give better offers to keep up with the latest products.
However, do keep a couple of things in mind before going to buy a car. A slow market also means low used-car prices. And some of these deals are contingent on you — as a buyer, taking finance and insurance from the carmaker’s own financing and insurance firms to take advantage of the discounts. So, always remember to read the fine print.
@kushanmitra is an automotive journalist based in New Delhi. Views are personal.
(Edited by Aamaan Alam Khan)