Three things for carmakers to do post-excise duty sop extension

Carmakers are a delighted lot after finance minister Arun Jaitley’s decision to extend the reduced excise duty regime of the previous government till the end of the year. It was certainly a welcome byte of news coming as it did after the 14.5 percent rail fares hike (that got partially rolled back and in the bargain spiked the revenues of the Mumbai’s western and central railways) and the now-bleak monsoon forecast.

It remains to be seen if prices of cars will be raised come the first of July as it has been reported in the media. In any case, carmakers were expecting some kind of a sales hike in June assuming the government did not extend this sop.

So what must carmakers and their supplies do?  Three things come to my mind.

Keep upselling your hit  product: Continue to innovate so as to woo the buyer. Many an OE has brought in new features in existing models that are doing well, whether it is in the form of some additional features, some element of exclusivity perhaps. M&M did this with a vengeance with the Scorpio and with a refresh on the anvil, they will be closely watched. The EcoSport is now a year old and Ford could perhaps look for ways to bring in more innovation into the product to make it more compelling going forward.

Continue to keep a lid on costs: Suppliers and indeed OEMs have done this quite admirably and must continue on this path. One component supplier uses software to control use of electricity on the shopfloor, thus generating savings in expenditures.

Finally, focus in a bigger way on the value factor. Clearly buyers can be wooed with interesting propositions in terms of product-specs, service delivery (which is an issue all the time) and making the buyer feel special. A poor monsoon may well play spoilsport and one cannot expect the footfalls at dealers to become a stampede overnight. Companies must continue to focus on making the deal sweeter for the customer.

In fact, the real piece of good news is the transport minister’s decision to build 30 km a day and revive comatose road projects. If that happens-and fast, it will be music to the ears of industry and the auto sector in particular.