1. In festive season, discounts drive car sales

In festive season, discounts drive car sales

With a third of the cars in the country sold during the festive season, typically between September and November, it’s not surprising auto companies save their best for this time of the year.

By: | Mumbai | Published: October 15, 2015 12:49 AM
car sale

Dealer checks conducted in Delhi and Mumbai show that Maruti Suzuki’s Alto and Wagon R are available for Rs 50,000 less — while some part of the discount is in cash, the rest comes in the form of an exchange bonus, free insurance or a corporate discount. (Representative image: Express photo)

With a third of the cars in the country sold during the festive season, typically between September and November, it’s not surprising auto companies save their best for this time of the year. However, even as there’s a flurry of new launches, carmakers are offering hefty discounts on older models hoping to clear inventories. These are typically a combination of cash, free insurance and exchange bonuses, and the smaller the car, the bigger the deal. From Maruti to M&M, Hyundai to Honda and Toyota to Tata, everyone’s out to tempt customers — depending on the model and the variant, buyers can save anywhere between Rs 25,000 and Rs 90,000.

Abdul Majeed, partner, PricewaterhouseCoopers, pointed out that inventories have piled up both in factories and in dealers’ showrooms and added that it would be hard to clear these without offering attractive prices. “With customers opting for new launches and rural markets dull, it’s becoming hard to sustain sales,” Majeed observed.

Amit Kaushik, country head, JATO Dynamics, a UK-based automotive intelligence and research firm, says another reason carmakers are being forced to drop prices is because the second-hand car market is giving them tough competition at a time when demand is subdued.

Gr6

Dealer checks conducted in Delhi and Mumbai show that Maruti Suzuki’s Alto and Wagon R are available for Rs 50,000 less — while some part of the discount is in cash, the rest comes in the form of an exchange bonus, free insurance or a corporate discount.

For the company’s Swift and Dzire models — among the more popular models in the industry — discounts range from Rs 22,000 to Rs 25,000 and Rs 32,000 to Rs 35,000, respectively. “Maruti has never offered any discounts on the Swift and the Dzire given how well these models have fared but now they are doing so,” said a dealer who did not wish to be identified. According to a Maruti Suzuki dealer in Delhi, discounts on the Celerio are just Rs 5,000.

Rival Hyundai is also resorting to discounts. Dealers say that during Navratri, an Eon mini car can be had for Rs 55,000-60,000 less thanks to a combination of free insurance, cash discounts and an exchange bonus. “The discounts are larger for entry-level small cars probably because they are not doing as well,” said a dealer in Mumbai, adding that some customers prefer to buy a bigger car if they perceive it to be a superior product.

The Korean carmaker is offering discounts worth R45,000-60,000 on the Verna, Accent and i10 during the Navratri period, and the cuts are expected to get deeper closer to Diwali. As of now, the Creta SUV and Elite i20 premium hatchback are driving most of the volumes for the company, which is why other models are available cheaper. For instance, one dealer in Mumbai told FE he was selling the Elantra for almost Rs 90,000 less than the original price, making it clear that not all the discount was in cash.

Mahindra and Mahindra, which has been hurt by weak rural demand, has upped the discount on the Bolero for the festive season. A customer can save anywhere between Rs 50,000 and Rs 60,000 depending on the variant he buys. For the month of October, the Scorpio too will be available at a discount in the range of Rs 45,000-50,000.
Honda and Toyota are also selling older models like the Amaze and Etios Cross at discounts, say dealers. Tata Motors has been offering discounts close to Rs 50,000 for the Bolt (a hatchback) and Zest (a compact sedan).

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