Gujarat car dealers expect 20-30% rise in sales in H2

Most car dealerships across Gujarat are optimistic about a recovery in sales during the second half of the current fiscal, banking primarily on new launches and a stable government at the Centre boosting buyer sentiments.

Take for example, a Toyota Kirloskar Motors dealership here in the city. Having sold just about 5,400 cars last fiscal, Ajit Mehta, chairman, Ininium Toyota that runs dealerships across seven locations in Gujarat, feels that the second half of this fiscal might see a jump of about 25-30 per cent in sales compared to last year. "We have already seen spot bookings increase significantly in the last few days, there has already been an improvement in sentiments. Car buying is all about sentiments," he said explaining further that spot bookings are at the level of 35-40 per cent of total bookings at the moment. This had dipped to around 15 per cent last year around the same time.

"In Gujarat, especially in the Ahmedabad region, spot bookings were as high 60 per cent of overall sales a couple years back. However, with spot conversions improving, we are likely to get back to 2012-13 levels very soon," Mehta said. Spot conversions essentially refer to the customer opting to book the car when he comes to to dealership making an enquiry.

Enquiries and footfalls have definitely increased manifold post the elections,claim dealers. Sukhbir Bagga, director, Group Planet Petal which operates 32 dealerships across the state covering six brands including even two-wheeler brands like Yamaha, said, "Footfalls and enquiries have seen a sharp increase post elections,a rise of about 30 per cent. While the actual impact on sales is yet to be seen, the sentiments have definitely turned very positive with the hope of an economic revival. We expect sales during the second half to grow at least by 20 per cent on a year-on-year basis."

Mehta pointed out something interesting, "On an average, the default ratio on car loans has not been very high even when car sales dipped low. It is around 2.6 per cent. This shows that car buying did not come down because of people unable to pay their loan installments in a tough economy, but more because, buyers were postponing their decisions awaiting to see some revival in macro economic factors."

Analysts point out that while it is too early to gauge which route the overall demand for cars would take, they do admit that positive sentiments can influence consumer behaviour. "A stable government and a hope of economic revival can definitely influence consumer behaviour. However, it is still early to fully understand what could be the impact on sales in the longterm. Also, much would depend on the upcoming Union Budget," said Yaresh Kothari, analyst with Angel Broking.

Meanwhile, a senior official in Maruti Suzuki India ltd (which reported a 19.2 per cent rise in May sales on an all-India basis) said, "Apart from footfalls and enquiries, conversion ratios have also started improving. In Ahmedabad region, we have seen enquiries to conversion improve from 20 per cent to 22 per cent in the last fortnight, and much can be attributed to the general positive sentiment." Upcoming new launches could help the case more. Honda Cars India has the facelift of Jazz and a Brio-based multi-purpose vehicle Mobilio lined up for launch later this year, while Maruti Suzuki India will come up with the Ciaz sedan. It has already launched the Celerio hatch as Hyundai has launched the XCent sedan.