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Rediff.com  » Business » More car makers jump on the discount bandwagon

More car makers jump on the discount bandwagon

March 21, 2013 11:51 IST

CarsMore car makers are offering discounts on vehicles, compared to the festive season of 2012, even as fewer consumers flock to showrooms.

According to Deutsche Bank analysts, models that recorded healthy demand earlier are now luring customers with discounts and consumer benefit schemes.

Waiting periods for all cars have fallen and several diesel-powered hatchbacks, demand for which was robust earlier, now have company- or dealer-sponsored discount schemes.

Top selling diesel-powered models such as the Chevrolet Beat, the Hyundai i20, the Mahindra XUV500 and the Maruti Suzuki Ertiga are sold at 1.6-7.8 per cent discounts (Rs 22,500-43,000) on the on-road cost of the vehicle, according to the Deutsche Bank report.

However, some companies that have been offering discounts since October lowered the extent of the discounts in March, primarily on petrol models, as the demand for these vehicles rose, albeit marginally, in recent months.

“With the introduction of offers on popular diesel cars and utility vehicles, discounts have been more broad-based.

While the current discount levels are significantly lower compared to October 2012, the trajectory is a cause of concern and reflects sluggishness in industry demand,” the report said.

Last month, the car industry recorded its worst monthly fall in 12 years, with sales plunging 26 per cent.

Customers held back purchases, owing to factors such as high fuel costs and high lending rates.

Though the Reserve Bank of India cut the policy rate by 25 basis points yesterday, bankers said it was unlikely lending rates would be cut any time soon.

The slowdown hasn’t spared new models, too. Maruti Suzuki’s entry level car Alto800, which had discounts of 13.6 per cent in October, saw discounts fall to six per cent in January, before rising to 7.5 per cent this month.

Tata Indigo diesel was offered at a discount of Rs 50,000, or 7.6 per cent, this month, while the once best-selling Chevrolet Beat was sold at a discount of Rs 43,000, or 7.8 per cent.

Due to a recent rise in diesel prices, customers opted for petrol-powered models, especially in January.

However, with customers deciding to cancel or postpone purchases, companies were forced to increase discounts on petrol models again.

Currently, the ratio of sales of petrol cars to diesel car sales is about 50:50.

Most utility vehicles have also introduced discounts, with the exception of the Renault Duster (which continues to see healthy demand).

The Mahindra XUV500, the Toyota Innova and the Maruti Suzuki Ertiga, which saw good demand earlier, have seen a fall in demand.

Swaraj Baggonkar in Mumbai
Source: