Slower sales prompt car makers to accelerate discount schemes

With sales slackening after record surges in January and February, car makers are quickly back to offering huge discounts and cost-effective finance schemes.

The discounts are 10 to 15 per cent higher than a year ago as dealers look to clear stocks ahead of the inevitable price rise next month once cars are upgraded for Bharat Stage IV (BS IV) fuels to comply with new emission regulations from April 1 in 13 cities. More than half the industry’s sales volumes come from these cities.

Company dealers are offering discounts that range from Rs 25,000 to Rs 50,000 and multi-brand outlets are topping that with Rs 10,000 to Rs 15,000 higher discounts on small cars (see table). Multi-brand outlets buy cars in bulk from dealers and get a better discount that they can pass on to customers when demand is slow.
 

KIND CUTS
Model (In Rs)	Dealer Benefit	Reseller Benefit
Maruti WagonR	42,000	52,000
Maruti Ritz	27,000	33,000
Mahindra Xylo	50,000	55,000
Hyundai i10	28,000	35,000
Tata Indica Xeta	30,000	38,000
Hyundai Santro	26,000	35,000
MR Logan*	50,000	65,000
Maruti Alto	26,000	35,000
Maruti Estilo	27,000	37,000
*Mahindra Renault Source: Car dealers

Car makers say there has been some impact on new vehicle bookings in the last couple of weeks as a result of the increase in excise duty last month. A Maruti Suzuki official confirmed the company would be signing new contracts with dealers from next month and are running special offers to clear current stock.

Ankush Arora, vice-president, marketing, sales and after-sales, General Motors India, said the discounts this year are higher than last year partly because of the introduction of the new emission norms.

“We are offering Rs 35,000 discount on the Spark with a three years maintenance package,” he said.

Despite the sales surge in the first two months of this year, car makers are bracing themselves for higher production costs with rising commodity prices and expected increases in interest rates. Companies have already made it clear that car prices may be raised again. All companies raised prices earlier this year as a result of rising raw material prices.