?Bring a car of any brand and take away our new car at a discounted price??this marketing trend is catching up with the dealers of almost all Indian auto firms.
With the global recession brutally hitting the auto segment, the Indian auto majors have locked horns with each other to retain their old customers and attract new buyers by announcing massive exchange offers that have started covering larger chunk of their overall new vehicle sales in recent months.
Auto firms are announcing exchange offers for two reasons. Firstly, a company can sell a new car and secondly, a car company can woo a customer who owns a car of some other brand. Talking to FE on the sidelines of new Hyundai Verna launch in Bangalore recently, Hyundai Motor India Ltd (HMIL) senior vice-president (marketing and sales) Arvind Saxena said, ?Approximately 25% of the company?s new car sales (ie 61,000 units of the total 2,45,397 cars sold by HMIL) were made via exchange offers in 2008 as compared with 20% in 2007.?
HMIL is a wholly-owned subsidiary of the Korean auto major Hyundai and the second largest car manufacturer in India. Chief general manager (sales support) of Maruti Suzuki India Ravi Bhatia said the company reported 20-25% new cars? sales via exchange offers in 2008, up from 16-17% recorded two years ago. ?Of the total 11-12 million passenger cars plying on Indian roads, Maruti accounts for 7 million cars. Hence we are committed to retain our customers when they sell their old cars. We should ensure our customers are buying Maruti cars after selling their old Maruti cars. Exchange offers helps achieve this,? said Bhatia, who also heads the company?s pre-owned car division Maruti True Value. In fact, the Indian car market leader Maruti that controls over 50% of the domestic market share, has a unique exchange offer scheme called Maruti Auto Card Loyalty Programme in which 20,000 reward points are equivalent to Rs 20,000. Any customer buying new Maruti car will be covered under this programme and would be rewarded points for the first four years on insurance, referring Maruti to new customers, servicing and spare parts purchase. After four years, if the customer exchanges his old Maruti car for a new one, he would be offered discounts based on the reward points.
Further, the company also offers exchange bonus like Rs 25,000 discount on high-end sedan SX4, Rs 10,000 on Alto, Omni, Swift petrol, Wagon, Zen and Versa, Rs 5,000 for its once flagship Maruti 800 and the latest launch A-Star, a Bangalore-based Maruti dealer said. However, this exchange bonus will vary from time to time, the dealer added. Bhatia said 35% of new cars sold in the Indian market are via exchange offers.
Mahindra and Mahindra, the largest utility vehicle maker in the country, is also betting big on exchange offers. Arun Malhotra, senior vice-president (sales and customer care) automotive sector of M&M said the company has launched exchange offers under the umbrella of Mahindra Xmart in April 2008 on pilot basis. Within 10 months, the company has expanded its exchange offer network across 62 dealerships in 50 cities and planning to add another 50-60 dealerships while increasing its presence to 100 cities, covering almost 85% of market by December 2009, he said.
?Our ambition is to penetrate the market via exchange offers,? said Malhotra.
Initially, the company has launched this offer for its new mid-size sedan Logan and high-end SUV Scorpio. Now the scheme has been extended to all its vehicles, including Bolero and Commander, Malhotra added. In certain pockets, the company has started witnessing 5-10% of new vehicle sales via exchange offers, he said. The company is organising more focused Xmart melas during the week ends in association with First Choice, the pre-owned car division of M&M. The other company cars bought by the company under Xmart exchange offer will be sold via its pre-owned car division First Choice.
As around 60-65 new vehicle launches are scheduled for 2009, the customers would more aggressively use exchange offers in the current year to exchange their vehicles for new models, said Vaishali Jajoo, an auto analyst attached a Mumbai-based broking firm Angel Broking.
Key new models (launched and to be launched) that are expected to boost exchange offers in the current year are hatchbacks like Tata Nano, Chevrolet Beat, Honda Jazz, Suzuki Splash/Ritz, Toyota?s unnamed small car and sedans like Chevrolet Cruze, and SUVs like Mahindra Xylo and Toyota Fortuner. Following global economic turmoil, the financial institutions have reduced their loan offerings to 50-60% of the vehicle value against 90-100% offered earlier. In such cases, the customer can easily meet his auto loan down payment requirement by exchanging his old vehicle for a new one, she added.