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Car manufacturers spent over Rs 3400 crore on advertising in FY21

The total cumulative advertising spends by these companies were down by 26.38% to Rs 3415 crore in FY21 from Rs 4639 crore in FY20

e4m by Javed Farooqui & Kanchan Srivastava
Published: Dec 24, 2021 8:52 AM  | 3 min read
Automobile ad budget

India’s leading carmakers slashed their ad spends drastically in the financial year 2020-21 due to a significant drop in vehicle sales in the wake of Covid-19 induced lockdown which impacted consumer demand.

According to data collated by exchange4media based on the annual company filings of 11 car manufacturers, the total cumulative advertising spends by these companies were down by 26.38% to Rs 3415 crore in FY21 from Rs 4639 crore in FY20.

The ad spends figures for Maruti Suzuki, Tata Motors and Mahindra & Mahindra has been sourced from the FY21 annual reports of these companies. The ad spend data of Škoda Auto Volkswagen India, Hyundai Motors India, Kia India, Renault India, BMW India, Honda Cars, Ford India, Daimler India, and Mercedes-Benz India are based on the financial data of these companies sourced by Tofler based on their annual filing to the Ministry of Corporate Affairs (MCA).

The country’s largest carmaker Maruti Suzuki had cut down its ad expenditure by 16.5%, from about Rs 670 crore in FY20 to Rs 561 crore in FY2021. Hyundai Motors, which is the second-largest automobile manufacturer in India, slashed its ad spend by 37% in the same period to Rs 464 crore from Rs 737 crore.

Tata Motors and Mahindra followed suit. While Tata Motors decreased its ad budget from Rs 761 crore to Rs 439 crore (-43%), Mahindra reduced it to Rs 259 crore from Rs 624 crore (-59%).

Daimler India Commercial Vehicles, which produces Mercedes-Benz India, and Škoda Auto Volkswagen India have bucked the trend and have increased their ad spending during the pandemic. Daimler has tripled its ad spend from Rs 28 crore to Rs 94 crore while Škoda Auto Volkswagen India increased it from Rs 445 crore in FY20 to Rs 665 crore in FY21.
Kia India's advertising spend shrunk by 36% from Rs 430 crore to Rs 317 crore while Renault India cut down its ad spends by 31.25% to Rs 264 crore from Rs 384 crore.

BMW India spent Rs 139 crore in FY21 compared to Rs 171 crore in the previous fiscal. Likewise, Honda Cars India ad spend for FY21 stood at Rs 132 crore as against Rs 149 crore. Ford India and Mercedes-Benz India's FY21 advertising spends dropped to Rs 111 crore and Rs 64 crore respectively. In FY21, the two companies had spent Rs 167 crore and Rs 101 crore respectively.

“The ad spends dropped in 2020-21 as there was no new product launch and sustenance campaigns were also at low level due to weak demands in the pandemic. The Ad Ex has improved in the current fiscal (Apr to Dec 2021) though it is expected to be 4-5 % less compared to pre-pandemic levels," Shashank Srivastava, Executive director, Marketing & Sales, Maruti Suzuki told e4m.

“Despite several challenges posed by the pandemic and the global semiconductor supply constraint, the Indian automotive industry has consistently contributed towards positive growth of the Indian economy. The Indian government is driving a variety of initiatives in parallel to boost the auto sector through product-linked, scrappage policy, etc. We are cautiously optimistic about these initiatives and hope it would bring investments and growth in the entire manufacturing value-chain in India," a Hyundai Motor India spokesperson said.

Industry watchers say that the Indian automobile industry has been grappling with a slowdown since 2019. First, it was the impending switch to BS6 emission norms followed by the COVID-19 outbreak in 2020. According to the Federation of Automobile Dealers Associations (FADA), passenger vehicle sales had dropped by over 28% in March 2021 compared to March 2020.  

And as things started showing signs of revival, the second wave of COVID-19 took a toll on the sales. But even as the number of COVID-19 cases in India has remained low over the last few months, the sales of vehicles is yet to pick up pace. There was a decline in passenger vehicle sales by about 20 percent in November 2021 compared to last November.

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