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Car buyers rushed to showrooms last month to commit last minute buys before excise duty was set to be raised from the beginning of this month.
While many car buyers advanced their purchases to avoid the steep mark up in prices that averaged around Rs 20,000 per vehicle, market watchers believe that there are enough factors to off-set the price rise.
With RBI cutting repo rate by 25 basis points, banks are expected to pass on that benefit to customers in a few days. As more than 70% of buyers choose finance for buying vehicles, a cut in lending rates would improve market sentiments, say analysts.
“So far January has been quiet. Activities will only increase once interest rates are eased by banks", said a Mumbai-based Hyundai Motor India dealer.
Secondly with petrol price hitting a near four year low, dipping below Rs 60 a litre it is directly benefitting six out of every ten buyers, more so in the fuel-efficient small car segment. Price of diesel too fell below Rs 50 a litre, the lowest since April 2013. These aspects will give market sentiments a further boost.
"Ultimately you have to look at the total affordability factor for the customer. While the car prices have gone up, if interest rates come down, if petrol prices come down it will offset the increase in price," Maruti Suzuki Chairman R C Bhargava told PTI.
Despite the hike, car makers have not withdrawn their discount offers. Almost every car, except those launched recently, carry discounts ranging from 5-15 per cent of the cost of the car. These include consumer benefits like waiver of insurance or registration costs, free maintenance contracts or free car accessories.
Further new car and bike launches will hit showrooms in the next few days which dealers say will further shore up sentiments driving consumer traffic to showroom.
Tata Motors will launch the Bolt hatchback while Mercedes-Benz will introduce the CLA compact sedan this week. Japanese car brand Nissan launch the Datsun Go+ last week. In the coming days Maruti Suzuki will launch a new hatchback while Hyundai is expected to launch a refreshed Verna.
Rakesh Srivastava, Sr Vice President (sales and marketing) Hyundai Motor India said, “In the last one year we launched four new products that helped us in gaining customers. We should be able to post double digit growth this year on the basis of new products and expanded reach. New SUV, a SUV looking car and a MPV this year.
Post the hike in excise duty many dealers were seen offering vehicles manufactured in 2014 at older prices. However those offers lasted only till inventory lasted at stockyards.
