COVID-19 brought with it job losses, salary cuts and collapsed businesses. The outlook for the economy was bleak and the auto industry in particular was badly hit. Thanks to the lockdown, April this year saw the Indian auto industry sell a sum total of zero vehicles, but the recovery was a surprise. Most passenger vehicle manufacturers saw a quicker-than-expected growth. Passenger vehicle sales for September climbed 26 percent year-on-year, with a total of 2,72,027 units dispatched.
Of course, the September 2020 growth came on a low 2019 base; with a slowing economy and rising vehicle prices, the year 2019 saw the lowest industry sales in 20 years. Still, month-on-month growth this year has been positive and the overall recovery is encouraging.
But this column isn’t about the sales recovery. No, it’s actually about what’s happening inside those figures. In the preceding few months, the Alto was outselling the Swift, but then sales for the Swift grew, and in September 2020 it outsold its more affordable and ever-popular sibling.
That’s pretty significant. People are supposed to be cutting back on spends. Perhaps, then, the Swift benefitted from folks dropping out of the Baleno, but Baleno sales remained unaffected and, in fact, grew as well. Also, according to folks at Maruti, who were just as surprised with this, the sales of lower variants of the Swift saw a spike; traditionally it’s the higher versions that sell more. So, if anything, this perhaps indicates buyers stretching to the Swift.
And it’s not just Maruti; others too have seen a preference for higher-spec or higher-segment models. This year, Hyundai sold more SUVs than cars for the first time since they set up operations in India. Of course entering the hot compact SUV space is a massive help, but SUVs outselling a car line-up that includes some very good and popular budget hatchbacks is no mean feat.
Yes, the need for personal mobility is now greater than ever, but what’s driving the sale of higher-end options? Why are vehicle purchases leaning more towards the emotional space? Revenge buying! I’m sure you’ve heard the term. With limited outlets for pleasure, like holidaying or even eating out, buyers are hitting back with a vengeance, indulging in retail therapy to drive away the COVID blues. It’s seen the world over and India is no different. Amazon and Flipkart didn’t just see a massive rise in spends at their recently concluded festive sales, but had a significant year-on-year growth, with many reports putting the value of goods sold at a massive Rs 19,000 crore.
I have no doubt revenge buying is what’s driving the sale of higher-end automobiles too. Sadly, many have lost their jobs and have had to live with salary cuts, but the car-buying public, it appears, has found better use for that European holiday budget. Yes, this is one time I’m happy to say revenge is sweet indeed.