In May came another shocker. Hit by Covid-19, Patel’s firm cut his salary by 30 percent. Dejected, the HR executive bought a little S-Presso for over ₹4 lakh. “I downgraded my desire, not my dream,” he says. A small car, he adds, is the new normal.
Meanwhile, in Delhi last month, Saurabh Saxena too slashed his budget, and intent. The travel agent had been planning for a year to buy the S-Cross, an SUV from the Maruti stable. However, the 30-year-old ended up buying the Ignis, a compact SUV that’s almost half the price of the S-Cross. Reason: His business went for a toss because of the coronavirus and subsequent lockdowns, and dipping into the cash reserves to buy a car seemed outrageous. Covid, he says, has been devastating for travel and tourism. Saxena still mustered the courage to buy a car. “I needed one to commute. You can’t book a taxi and travel now,” he says, expressing his concerns about sharing a car and using public transport.
Cut to July. Maruti Suzuki, India’s biggest four-wheeler maker, posted sales of 108,064 units, a sequential growth of a staggering 88.2 percent over June. While April was a washout for the entire auto industry, a truncated May helped sell a paltry 18,539 units. Comparisons with the previous year in a new normal may be futile up to a point, yet Maruti’s July sales are a little under 1.1 percent compared to July 2019. The auto bellwether reported its first quarterly loss (April-June) since listing in 2003.
The small car revival is being aided by two contradictory forces at play. First, people are viewing private transport as an antidote to public transport. At the same time, incomes have got slashed, and businesses have been hit badly. “So people will buy a more affordable car,” says Srivastava, adding that over 80 percent of car sales in India are through finance. Downtrading to small cars will also bring down the EMIs. The trend, he adds, will also have a rub off on the used-car business. “While the demand is high, supply is an issue as people are holding on to their cars,” he says. As discretionary car buyers take a back seat, first-time buyers are up in numbers. “They are buying for functionality. They need it,” he adds.
Covid-19, reckon auto analysts, has dealt a sucker punch to big cars. “Socialising has come to a stop. The coronavirus has taken the fun out of life,” avers Murad Ali Baig, a veteran auto analyst. The trend, he lets on, is going to stay firm over the next few quarters. The market over the next few months, Baig stresses, will mostly see buyers who need a car to commute. “And for commuting, the basic model serves the purpose. Nobody is buying to flaunt,” he adds.
Spinny, an online used car retailing platform, has also seen the trend of consumers downtrading and gravitating towards small cars. “There is a jump in the demand for small cars between ₹3 lakh and ₹5 lakh since May,” contends founder Niraj Singh. Over the next few months, he avers, more consumers will opt for entry-level hatchbacks and used cars. “Small is set to become big again,” he adds.
For Maruti, a big rebound may clearly begin with small gains.
First Published: Aug 18, 2020, 10:41
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