What slowdown? 50 plus new launches to fuel auto sector media spends

New launches, upcoming festive season & the belief marketers have in a demand-driven market like India will drive media spends in spite of economic uncertainties

e4m by Abhinav Trivedi
Updated: Aug 26, 2013 8:12 AM  | 4 min read
What slowdown? 50 plus new launches to fuel auto sector media spends

Car sales in India in July 2013 dropped by 7.4 per cent. According to the latest data released by Society of Indian Automobile Manufacturers (SIAM), domestic passenger car sales declined to 1,31,163 units in July this year from 1,41,646 units in the same month of 2012.

While total sale of commercial vehicle dropped by 14.93 per cent, the sale of heavy and industrial vehicles dropped by 19.88 per cent.

The IIP is low and this has added further to the higher input cost of the sector. Coupled with declining Rupee and high cost of fuel, the market is bearish towards the auto sector.

In spite of all these factors and economic brawl working against the growth rate of the sector, new launches are always on the fray. Hyundai, Skoda, BMW, Mercedes, Maruti, Tata, Mahindra, Ford, Volkswagen, Honda, etc., are all prepared for new launches.

As per market experts, more than 55 four-wheeler models are slated to be launched in this financial year. Will this affect media spends in this financial year? Critics and market experts are optimistic.

exchange4media had earlier reported that ad spends from the auto sector are likely to surge in this financial year. With economic development turning the sentiment of the market bearish, it is learnt that the ad spends have translated into media spends and marketing strategy. To break the clutter, auto players, like other sectors, have started using more and more interactive platforms to reach and talk to consumers – be it an invitation for a test drive, car replacement challenge or a hiking expedition. Mercedes Benz recently launched a campaign starring Abhay Deol, by motivating audiences to keep driving even after arrival of destination.

Sumantra Barooah, Associate Editor, Auto Car Professional said, “There are some brands that have been hit by the ongoing slowdown, but their overall marketing efforts have gone up. Contrary to the earlier times, auto manufacturers today start a hype factor much before the launch of their model. As far as ad spends are concerned, many of the players have already increased it substantially.”

As Sumantara said, in spite being hit by cost cutting, low margins, high attrition and plunging sales figures, some brands continue to maintain a consistent splurge on media spends. As per critics, Tata Motors is one of the worst hit automobile player, but not only did it recently launch its new SUV Storme, the company is also the presenting sponsor for an upcoming series on Colors channel.

Automobile players are looking for not just vanilla advertising, but for holistic integrated communication.

Marketing Head of another leading magazine, on condition of anonymity, said, “The sector is in a difficult paradigm, but the spends have not declined. One can owe it to the belief the marketers have on a demand-driven market like India and the upcoming festive season. Secondly, auto is a sector where consistently new launches happen, and a player needs to convey the development.”

He further added, “Today players are refraining from plain advertising, but are going for packaged deals. Players want a good media mix of BTL and ATL activities. The consumer today is very smart and players understand that interaction is the key here.”

As far as the future is concerned, analysts are positive about the splurge of the money from the sector. Yaresh Kothari, Auto Analyst, Angel Broking said, “The two-wheeler market is more robust than the four-wheeler category market when it comes to volumes. So the spends are likely to be witnessed from that section. New launches will drive volume for the four-wheeler category and this is likely to have a positive effect on the media spends.”

Will auto recalls have an adverse effect on spends?
Of late, leading auto players have recalled many of their models. Toyota, GM, etc. have recalled some of their premier models from the roads. Will this effect media spends?

Barooah of Auto Car added, “Society of Indian Automobile Manufacturers recently came with a formal recall strategy of automobiles. Indians usually associate a lot of taboo with the recall and this is what discourages the brands to recall. But steadily it is being realised across spectrums that recall is not a bad activity. Brands are voluntarily recalling their models, if needed. In this phase, even if brands stop ad spends, the media spends would not be curtailed. This is done to restore the brand equity e.g. corporate ads which have recently been launched by various auto players.”

Kothari of Angel Broking further said, “Recalls would not have a major affect on ad spends. Auto players continue to spend, even after that.”

Most of the auto players we reached out to declined to comment on the story, but critics argue that the slowdown is likely affecting their margins. In spite of this, advertising is a key strategy for auto manufacturers and it will further see surge in the festive season.

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