Major Indian automakers significantly reduced their advertising spend in fiscal year 2020-21 due to a significant drop in vehicle sales following the Covid-19-induced lockdown which impacted consumer demand. consumers.
According to data compiled by exchange4media based on the annual statements of companies from 11 automakers, the total cumulative advertising spend of these companies decreased by 26.38% to Rs 3,415 crore in FY21 from Rs 4,639 crore in FY20.
Advertising spend figures for Maruti Suzuki, Tata Motors, and Mahindra & Mahindra are taken from these companies’ FY21 annual reports. Škoda Auto Volkswagen India, Hyundai Motors India, Kia India, Renault India, BMW India, Honda Cars, Ford India, Daimler India and Mercedes-Benz India ad spend data is based on these companies’ financial data from Tofler based on their annual filing with the Ministry of Corporate Affairs (MCA).
The country’s largest automaker, Maruti Suzuki, cut its advertising spend by 16.5% from around Rs 670 crore in FY20 to Rs 561 crore in FY2021. Hyundai Motors, which is India’s second-largest car maker, cut its advertising spend by 37% over the same period, from Rs 464 crore to Rs 737 crore.
Tata Motors and Mahindra followed suit. While Tata Motors reduced its advertising 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 turned the tide and increased their ad spending during the pandemic. Daimler tripled its advertising 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 ad spending fell 36% from Rs 430 crore to Rs 317 crore, while Renault India cut its ad spending by 31.25% to Rs 264 crore from Rs 384 crore.
BMW India spent 139 crore rupees in fiscal year 21, compared to 171 crore rupees in the previous fiscal year. Likewise, Honda Cars India’s advertising spend for FY21 amounted to Rs 132 crore versus Rs 149 crore. Ford India and Mercedes-Benz India’s advertising spending for fiscal 21 fell to Rs 111 crore and Rs 64 crore respectively. In FY21, the two companies spent Rs 167 crore and Rs 101 crore respectively.
“Advertising spending fell in 2020-2021 as there was no new product launch and livelihood campaigns were also at a low level due to weak demand during the pandemic. The Ad Ex has improved during the current fiscal year (April to December 2021) although it is expected to be 4-5% lower than pre-pandemic levels, ”he told e4m Shashank Srivastava, Executive Director, Marketing and Sales, Maruti Suzuki.
“Despite several challenges posed by the pandemic and the global semiconductor supply constraint, the Indian automotive industry has always contributed to the positive growth of the Indian economy. The Indian government is running various initiatives at the same time to boost the automotive sector through product scrapping policy etc. We are cautiously optimistic about these initiatives and hope that they will bring investment and growth across the entire manufacturing value chain in India. “said a spokesperson for Hyundai Motor India.
Industry watchers say India’s auto industry has been struggling with a slowdown since 2019. First, it was the impending switch to BS6 emission standards followed by the COVID-19 outbreak in 2020. According to the Federation of Automobile Dealers Associations (FADA), passenger vehicle sales fell more than 28% in March 2021 compared to March 2020.
And as things started to show signs of recovery, the second wave of COVID-19 weighed on sales. But even though the number of COVID-19 cases in India has remained low in recent months, vehicle sales have yet to pick up. There was a decline in passenger vehicle sales of around 20% in November 2021 compared to last November.
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