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Chunky discounts to drive car sales

Discounts on Wagon R and Alto have increased to almost Rs 75,000 in the form of exchange bonuses, corporate discounts, accessories or cheaper insurance.

By: | Updated: September 20, 2016 6:04 PM
Analysts explained that with companies selling more high-end cars than before it was possible for them to drop prices somewhat for smaller cars. (Source: Reuters) Analysts explained that with companies selling more high-end cars than before it was possible for them to drop prices somewhat for smaller cars. (Source: Reuters)

Carmakers are offering lucrative discounts on older models in a bid to push through volumes even as newer cars command waiting periods of anywhere between 16 and 30 weeks. Indeed, the festive season could see more Dzires, Swifts, Grand i20s being delivered rather than Balenos, Vitara Brezzas or Cretas since neither Maruti Suzuki nor Hyundai has the capacity to roll out these models as quickly as buyers want them.

Discounts on Wagon R and Alto have increased to almost Rs 75,000 in the form of exchange bonuses, corporate discounts, accessories or cheaper insurance. For the Swift and the Dzire they are somewhat smaller at between Rs 35,000 and Rs 40,000, but then Maruti has never needed to offer freebies for these cars.

There could be several first time buyers this time especially among government employees whose salaries have increased following the recommendations of the 7th pay panel. Industry watchers believe customers, who want to buy a car at an auspicious time, may settle for older models rather than wait six or seven months. A spokesperson for Maruti Suzuki said discounts were being offered in line with market trends and keeping in mind the competitive scenario. Analysts point out that since older models too have been upgraded with safety features customers might be willing to buy them.

“After all if the Eon is available cheaper by Rs 45,000 toRs 50,000, it’s not a bad deal,” said an analyst adding a Grandi10 from Hyundai should also find takers since buyers would effectively save some Rs 35,000. In fact, some may be willing to settle for the Honda Jazz, a premium hatchback, if they spot a bargain. Or even older models like the City and the Amaze if the firm throws in some additional freebies.

Tata Motors has announced a nationwide festive offer, ‘Har Week Diwali’; seven customers who book any Tata car will be eligible for `10 lakh each and some free insurance to boot. The company is promising a discount — with cash benefits of up to `1 lakh on the Safari Storme and `20,000 on the Zest. Consumer sentiment, according to Mayank Pareek, president, passenger vehicle business, Tata Motors, is already at a high point.

“It’s an exciting time and through the offers we hope to give our consumers another reason to buy their favourite cars,” Pareek said. The company has increased the total discounts for products like Zest and Bolt by about Rs 50,000 to Rs 70,000, according to dealers. “Tiago now comes with a waiting period of 6 to 8 weeks but the there are discounts on Zest and Bolt. On both cars there are cash discounts along with exchange bonuses and both the products are readily available for customers,” a dealer in the western suburbs of Mumbai told FE.

One dealer in south Kolkata told FE that discounts on the Swift, Dzire and Celerio have been bettered for Durga Puja and Diwali when traditionally car sales see a jump. “Discounts could go up further in October, “ the dealer added saying corporate discounts had been increased in September. “We are also offering gifts from lucky draws at our showrooms,” he said.

Analysts explained that with companies selling more high-end cars than before it was possible for them to drop prices somewhat for smaller cars. “What they might give up on small cars they make up on the premium cars,” he pointed out, adding they were pursuing a portfolio strategy.

As Kumar Kandaswamy at Deloitte points out, with consumer sentiment certainly better this year thanks to the good monsoon and the salary increase for government employees, companies want to push through volumes during the festive season. Since some companies are offering discounts others have joined the bandwagon.

“With discounts having been increased, we expect to see more demand for Grand i10 and Verna. The demand for Creta and Elite i20 too is high” said an executive working for Hyundai dealership in Mumbai’s eastern suburbs. One car insurance agent in New Delhi said even Ford and Renault were likely to announce discounts in one form or another since they couldn’t afford not to do so. “There may no discount on the Kwid perhaps but other models could become cheaper,” he said.

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