Earlier, discounts were given only during December to clear inventory of the products manufactured during that calendar year as their demand slackens in the new year.
By Pritish Raj
As car sales continue to remain sluggish, car makers are offering discounts even in the month of March on the models manufactured this year. Earlier, discounts were given only during December to clear inventory of the products manufactured during that calendar year as their demand slackens in the new year.
This time the December discounts continued till February because the inventory was higher because of poor sales during the festive season of Dussehra and Diwali. However, since vehicle sales continue to be sluggish, manufacturers are offering discounts in March as well for models produced this year so that they can clear their inventory before closing of the financial year.
Maruti Suzuki is offering a cash discount of Rs 30,000 on Alto 800 and Rs 25,000 on Swift petrol in March. A `15,000 cash discount is being offered on its compact SUV Vitara Brezza and `25,000 on compact sedan Dzire.
“There are also some special benefits for corporates and government employees, which includes exchange bonus and free one-year insurance,” a Maruti Suzuki NCR dealer told FE.
Tata Motors is offering a cash discount of `15,000 on its compact SUV Nexon (Diesel) besides free insurance on the 2019 manufactured model. The company has also lined up a discount of `25,000 on SUV Hexa alongwith an exchange bonus and free insurance.
“Customers usually prefer the latest models even when higher discounts are being given on the previous year’s units. However, offers on 2019 units are helping in conversion to sales,” a Tata Motors dealer said.
Hyundai India is offering a Rs 45,000 cash discount on its compact hatchback Grand i10 and Rs 40,000 on compact sedan Xcent. A Hyundai dealer said, “Most of the consumers ask for cash discounts and if it’s not available, they tend to move to other brands or delay purchases.” Toyota has also put on offer a discount of Rs 25,000 on its sedan Yaris while Volkswagen is offering a cash discount of Rs 65,000 on sedan Vento. Offers of upto Rs 35,000 is also on its other models such as Polo and Ameo.
Analysts at Edelweiss Securities said higher discounts may lead to improvement in conversions. “Demand for passenger vehicles (PV) continues to remain weak. Hence, not surprisingly, discounts have made a strong comeback,” they noted. Analysts at Nomura said inventory seems to have increased further during February. “Wholesales are likely to remain subdued despite some improvement in retails in March due to marriage season,” they said in a report.
Companies usually do not offer any discounts, atleast till the first six months of a calender year and sops start flowing during the festive months of Dussehra, Diwali and Christmas. But this year, offers are being rolled out much in advance as PV sales has remained tepid since August 2018, falling for seven out of eight months.
In January and February, volumes fell 1.87% year-on-year (y-o-y) and 1.11% y-o-y, respectively, and with just one month for FY19 to end, the industry will register one of its slowest growth in the last four years at around 3% in FY19. The last time the PV sales had fallen below 4% was in FY15. In the April-February period this fiscal, PV sales have grown 3.27%, after which industry body Society of Indian Automobile Manufacturers (SIAM) trimmed its guidance to 3% y-o-y. In the beginning of the fiscal, SIAM had projected 8-10% growth for PV sales but it was revised to around 6% after dip in sales from October onwards.
Analyst at Kotak Institutional Equities (KIE) said demand is still subdued due to weak consumer sentiment, which would impact industry volumes over the next few months. “We expect the weakness in volumes to continue until general elections,” they said.