Why carmakers offer discounts: Reason for special/limited edition model launch explained

The topics of launching a limited edition car as well as giving out discounts is much closely related than we think. Express Drives simplifies it for you.

By:March 8, 2021 2:47 PM
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Ever heard of the fact that a special edition or limited version of a car has been launched? Yes, of course you must have. We have just crossed Diwali as well as the year-end. These are the times when carmakers come out in full force and offer a lot of discounts or bring in limited editions. The primary reason as customers see it is to entice them into the showrooms. The topics of launching a limited edition car as well as giving out discounts is much closely related than we think. We will explain them separately to you, of course. Let’s start with the discounts factor. As you may have observed, on Express Drives, every month there is a section on the various discounts on offer in the Indian car scene. These discounts usually start from the beginning of the month are on till the 28/30/31st.

Also Read Renault India car discounts

Discounts on new cars explained

Manufacturers, especially the mass-market ones, like Maruti Suzuki, Hyundai and so on dispatch vehicles to their dealerships each month. Considering that most of these vehicles are fast-moving, the stockyards usually follow the FiFo method – earliest manufactured car is given to the customer. Sometimes, a car is stuck mainly because that color might not be in demand. The dealer personnel will try and allot this car to you – they try and inspire you to go for this colour citing various reasons for this “perfect” choice. At the same time, if the colour you asked for in the first place isn’t in stock, they persuade you to go for one which is readily available in the stockyard. If you don’t agree, they throw in discounts. Mind you, this car has already gone through a depreciation just sitting at the stockyard for almost a month or so. The more it waits there, the chances are that it sale may be delayed thereafter, posing a headache to the dealerships. This is why after another month, you will find more incentives on this same car.

During their fortnightly meeting, sales advisors are often told to carry the stock list with them when interacting with customers. This not-to-be-shown stock list mentions the age of the car and what discounts one can offer on it. Mostly, if the customer is happy taking the car as it is (without asking about its age or discounts), the sales advisor will not mention the monetary benefits of this vehicle. If its the year-end, dealers know that customers expect a freshly-minted model and not from the previous 365 days. This is where the sales advisor will throw in the discounts and try and assure the customer to go in for the previous year’s stock. No harm in this but haggle as if your life is dependent on this.

We often assume that because the model is slow-selling, the dealer is generous enough to give a discount. That’s not the case. He is saddled with a depreciating asset and hence wants to get rid of it asap. In the case of imported cars, you will rarely find discounts. This is because a customer usually pays a higher upfront downpayment on this product and there are lower chances of backing out of the deal. Even if he/she does, they mostly stand to lose the downpayment thereby allowing the dealer to buy more time to look for another customer.

Reasons for introducing limited/special editions

When an existing model is at the end of its life cycle, to make way for the new car, manufacturers raid their parts bin and add few new bits to the car and sell it. These are your special or limited edition models. These hasten the end of the current model and pave the way for their new cars. Maruti did this recently with the Swift. At present, you can only see one manufacturer combining the two (discounts and limited editions) and that happens to be Honda Car India. The manufacturer offers its WR-V as well as Amaze Exclusive editions on discount along with the regular versions of the cars.

Also Read Discounts on Honda cars this March

Many a time, during the festive season, manufacturers bring in these limited-to-90-days editions to spice up the demand. The demand of these cars picks up due to the slight difference compared to the regular version. Moreover, these command (perceived) a better resale value as well.

So the next time, if a sales executive tries and tells you that he/she is helping you by going out of the way and offering discounts, then show them this article. Jokes apart, you’re easing the headache of the dealership by taking that particular model and hence this monetary compensation is a given.

 

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