In-depth: Auto ad spend continue to grow despite sectoral slowdown

The sales of mass car and two-wheeler brands have been on a decline in the last two quarters, forcing several companies to go on production holidays, laying off temporary staff and even shuttering down retail outlets.

But new cars such as MG Hector, Kia Seltos among others have been booked in thousands.
Experts say new car launches are driving ad spends, which are likely to grow by 10% in the coming months, in the sector.

Avinash Hegde

The festive season is smaller this year, around 45 days. Hence, auto advertising is growing at 10% on the back of new entrants, launches and refreshes. This is expected to continue in the festive season, Avinash Hegde, Vice-President of Lodestar, said.

New entrants and new launches and refreshers by leading brands in the auto category have continued to stimulate the market and kept the momentum up despite the slowdown. Auto sales dipped but media spends have not reversed in the same proportion.

Vijay Kaul

Vijay Kaul, Deputy General Manager, Yamaha, said the festive season’s ad spends will not slow down in overall auto category because the number of players have increased. But if brands are compared individually, there will be degrowth compared to last year.

Shashi Sinha

“Most advertisers will try and leverage the season as that is their hope of a turnaround and that is true for auto too. Companies will put an extra effort through sales, promotions and discounts to get inventory off the shelf, which will be good for consumers. Hence, ad spends will be better than what they were in the last three months but will be in line with last year’s Diwali — not significantly higher but definitely not lower,” said Shashi Sinha, CEO, IPG Mediabrands.

In the coming period, launches/refreshers are slated from brands, where planning and investments on production have already happened. On the back of expected auto reforms, there is expectation that it would reverse slowdown to some extent, Hegde said.

Anita Nayyar

“There is far too much inventory that needs to be sold. For new players such as MG and Kia, it has been good going given their innovative offerings. Brands like them may want to encash during the festive season,” said Anita Nayyar, CEO India and South East Asia, Havas Media.

Given that India is still an agriculture-driven kind of an economy, and monsoon has been good in the country, this can also push demand in certain places, said Kaul.

Yamaha is betting on its three pillars, R15, FZ series and MT series, this festive season along with the community-driven market.  It is rolling out special customised schemes on scooters and motorcycles.

Tata Motors is offering benefits of up to Rs 150,000 on a few models. With exchange offers, it has tied up with multiple banks and financial institutions to offer up to 100% on road finance and low EMI finance packages for their products this festive season.

With a 50% increase in digital spends over last year, Yamaha is mainly investing on television and digital.

Talking about the overall category, he said, “Digital momentum has picked up and print is witnessing some kind of de-growth. Thus, there is high traction for digital and performance campaigns during festivals, which earlier dominated print for all tactical campaigns.  More money is being pumped into digital spends. TV probably will remain same and print and radio will de-grow.”

According to Nayyar, print and TV will be the two choices for the brand for cost-effectiveness and impact.

Hegde said as multimedia approach is used widely for driving awareness and consideration in the category, he would expect it to continue with no impact on any medium.

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