Slow market forces new cars to ride on discounts

Cars launched during festival season have struggled to attract buyers

Sluggish market conditions have forced many car makers to dole out hefty discounts even for vehicles launched only four to five months ago.

Cars launched in July-September 2015, in time to meet the festive frenzy, have struggled to attract buyers in the face of tough competition from segment leaders and weak demand.

The S-Cross, the crossover from Maruti Suzuki, was seen with a discount of Rs 100,000 only two months after its official launch. Hyundai’s sports utility vehicle Creta, which carried a price tag similar to that of the S-Cross, swayed customers and is retailed with zero discount.

Further Maruti Suzuki, which is the domestic car market leader, launched a special edition of the S-Cross christened Premia to attract buyers. Companies typically take more than a year to bring out a special edition of a particular model. Ford India, which consecutively launched two models, Figo Aspire and Figo in August and September, respectively, is giving away chunky benefits on both. The Ford Figo Aspire, a compact sedan pitted against the Maruti Suzuki Dzire, is carrying consumer benefits worth Rs 62,000 while the hatchback Ford Figo is offering benefits of  Rs 53,000.

Though there is no direct discount on the recently launched Honda Jazz, but dealers are willing to offer corporate discounts on the premium hatchback.

December is the worst time for dealers and car makers as consumers prefer to wait for the new year to make the purchase because of the year of registration. Discounts usually hit annual highs in this month. There has been no respite on discounts offered this year despite the industry witnessing near double-digit growth.

R C Bhargava, chairman, Maruti Suzuki, said, “If you look at the capacities in the industry, half of them lie utilised as of today. Discounting is still very high. If you leave out a handful of models then the industry does not look to be in very good shape.”  Maruti Suzuki is giving discounts on most of its volume models like the Alto, Wagon R and Celerio. Hyundai is not far behind. Except for the i20 and Creta, both of which have been very well received, all the other models like the Eon, i10, Grand i10, Xcent, Verna and Elantra are offered with discounts.

American brands Chevrolet and Ford have even run year-end sales to attract buyers. Chevrolet is giving assured benefits of up to  Rs  138,500 on select models with customers also getting a chance to win a free Chevrolet car and cashback up to  Rs 100,000.

The premium sedan Chevrolet Cruze offers the highest benefits of up to  Rs 138,500, including cash discount, first year free insurance and exchange bonus. On the Chevrolet Enjoy, Beat and Sail, the benefits total  Rs  77,000,  Rs 76,000 and  Rs 75,000, respectively.

“Discounts are high and that is hurting our financials. Consumers are overlooking older models and are enquiring only about new models,” said a Mumbai-based car dealer for Maruti Suzuki.