Thoughts on car discounts in 2024 and macro-economic situation in India

What caused Maruti Suzuki to reduce the prices that too by approximately Rs 60,000 for a Rs 7 lakh car?

BHPian NotanF1driver recently shared this with other enthusiasts.

Setting the context

I was in the market for a new car for my wife, a year or so ago. We went to check out the usual place where all budget car buyers go - Maruti Suzuki. Checked out the Alto, S-Presso and Celerio. Our priority was cheap and easy-to-drive automatic. We got the quotes for S-Presso and left for home, but did not pursue the plan due to various reasons. Fast forward to today, my wife's current car was starting to show its age (Nano XTA -2016) and a recent service warned me about upcoming costs. So, we were back in the market and asked for a quote for the S-Presso - the same model.

The quote I got this time was different to the price I had in mind. Pleasant surprise - the price of the car has gone down by some 60k. At first, I thought the quote was of a non-AGS model car, which was not the case. As far as I remember, the quote a year ago was around 7.2 L on-road for VXI+ AGS. Now it was down to 6.55 L. I think there was a reduction in base car price (unsure)- on-road was showing around 7.05L and a 50k discount was applied on the on-road price.

Source 1 for the thought

What caused Maruti Suzuki to reduce the prices, that too by approximately 60k for a 7L car?

There have been several threads lately about discounts being available on new cars. Another incident happened last day - My brother had booked a Tour M (Ertiga taxi version) some time ago and was told that there would be a 6-7 months wait time. He changed his decision and changed the booking to Ertiga recently (moved from Tour M), not choosing a colour. He got a call from the dealer this week saying that there is ready delivery stock available. The dealer even told me that there were a few 2023 December make Ertigas available!

Source 2 for the thought

How can there be unsold cars from 2023 for a car which has a long wait period? Maybe it was badly planned by the dealer, but, how can a 2024 make Ertiga available fast despite the change in booking?

Source 3 for the thought

Other indicators:

• Sense a bit of "not so good" performance from our line of business at work. I don't worry too much about it, as ups and downs are common during the year - or is it?
• A week ago, I was contacted by a recruiter offering me a position in another company. When speaking about salary, I said I expected an industry-standard hike of 30 - 40% (considering relocation) – to which he said that there were some instructions given to him that the hike could be only somewhere in the 20% range. Though this is usual, I was a bit taken aback since the level at which they were hiring is one level above my current designation, and the role is in a metro city compared to mine which is a tier 3 city. The hiring market (at least for my role) is not so promising these days.
• One of our family friends was speaking to my parents who were saying that they were unable to find takers for a couple of their land/building properties. I take that with a pinch of salt, though – they would have expected an unreasonable sale value. Or is it that the real estate market does not have enough buyers?
• I have been hearing companies having plans to reduce their workforce and resorting to layoffs to reduce costs.

It could be that demand for new cars has now stabilized after the COVID spree. Everyone who wants/needs a car would have had it by now, and will be comfortable for the next few years - this would have reduced current demand for cars, leading to discounts and offers.

OR

We all know that there are slowdowns reported in other countries, whereas India has always shown positive signs. Though this might be true, the current discounts read alongside the points mentioned in "other indicators", is there an upcoming slowdown in growth (may not be so bad that there is degrowth, but a reduced pace)?

What do you all think of the recent discounts and macro-economic situation? Is it a demand stabilization phase for the automotive sector or is a slowdown coming up? Can we have views?

Here's what BHPian Shreyans_Jain had to say about the matter:

All the points you have raised are valid to an extent. The boom period post-COVID is over, the pent-up demand has been exhausted, and the macroeconomic situation is what it is. The fact is that the auto industry is sitting on massive amounts of unsold inventory. These people have overplayed the waiting period nonsense and indiscriminately raised car prices over the past three years, which is now coming back to bite them. I see price reductions and corrections happening across the board. It’s a buyer’s market again.

Here's what BHPian Sk8r had to say about the matter:

Along with discounts, there is a lineup of "VFM" variants being launched from various OEMs. Cross-posting from another thread.

On your point regarding inventory, I think it's a real problem. This news article throws some light, although a few bits might be exaggerated.

Regarding your indicators, on

• Point #2 : Absolutely, the Covid era craze of 40-60% hikes is gone and recruiters (& we) are back to our senses. Not before causing a slew of domino effect damages to inflation across all segments, thanks to US printing money like no one is watching.
• Point #3 : If there is one industry milking the middle class - it's real estate. The banks (with easy loans) + mighty real estate companies + black money have inflated property prices c-r-a-z-i-l-y. It's almost beyond middle-class reach unless we're slaves to the bank for the next 20 years.
• Point #4 : This keeps happening and is not a surprise, more so with listed companies and their blood-quenching thirst for margins to satisfy shareholders.

Here's what BHPian avira_tk had to say about the matter:

This is specific to Kerala, assuming from your given location, my relatives told me about a rich guy who's dropped his plans to acquire commercial real estate. The cost of registration/red tape is nearly 50% over the property cost. The same red tape is preventing him from operating his primary business at full capacity. The problem is self-inflicted, in Kerala at least.

The stock market is more liquid and the local goons can't grab your demat shares, that's where the money is going.

Here's what BHPian stickshiftftw had to say about the matter:

I was in the market for a small, reliable automatic car that did not compromise much on the safety front. Considering the stable shell structure of the Honda Amaze, I went to a couple of dealers to get their quotes. It turned out that while the OTR price is about 11.2L for the VX CVT in Odisha, I got mine for about 10.2 with the showroom insurance, car cover, basic kit and seat covers thrown in! The dealer had one in stock for the last 3-4 months because of a large lot having arrived from Honda. I think I agree with the fact that larger inventory pool-ups are causing this.

Also, I think discounts on Mahindras are going to be underway since a friend of mine who interned there said that there were a huge lot of cars just simply sitting there waiting for the chips to be installed. With shortage now well in control (PS5 being back in stock is a benchmark case), I think this should just about clear up the queue.

Check out BHPian comments for more insights and information.