Why Auto- makers are Gearing Up for Retail Push?

The automobile industry is undergoing one of the worst slowdowns in recent years, which bound them to bring down the inventory with dealers and focus on retail sales. The automobile companies have also attached their hopes on the festival season for better volumes.  

Shashank Srivastava, Executive Director (Marketing & Sales), Maruti Suzuki India said that the top-most priority for them is pushing the retail sales rather than focusing on wholesale sales, after taking due notice of the rising inventory levels with dealers. 

He added that “As the stock increases and as payment to banks have to be made on a due date, how quickly you rotate your funds or how quick your retail sales are matter. In the absence of retail (sales), the stock goes up, and therefore, your exposure to the bank also goes up, because you are carrying a much larger stock”.  

In the case of Maruti, the stock with dealers went up to around 40 days in the last quarter and after “better calibration”, it has decreased to 33-34 days. 

Rajesh Goel, Senior Vice-President and Director of Honda Cars India is taking measures across divisions to keep costs under control. He said in a statement, “In times like these, it may not be a great idea to reduce the marketing expenses, but efficiencies need to be brought in. Our focus is to avoid accumulation of inventory at dealerships. We are focusing on strong market offers and targeted marketing to bring the customer into our showrooms”. 

Moreover, Tata Motors is focusing on increasing its retail sales. SN Barman, Vice-President, Sales, Marketing and Customer Support, Tata Motors, said that the company had taken a “conscious call” to focus on pushing retail sales as opposed to sales to wholesalers. The company is continuously trying to bring down the dealer stock to its desired level of 21 days. It is also taking a big risk by investing on the rural market and planning to increase its reach to drive growth.