If you are in the market this festive season looking for a new two-wheeler or passenger vehicle (PV), you are in luck because auto companies are offering the best benefits ever.
This is the last-ditch effort by automakers to shore up sales in a financial year that has been marked by poor purchases and production cuts.
“This is one of the worst times for the industry. That is why we are seeing the best offers from the companies,” said Prayesh Jain, analyst at Yes Securities.
Auto dealers said the schemes on offer this season were unprecedented and could not be compared to those last year in value terms when companies had built huge stocks in anticipation of a good festive season.
The idea last year was to attract customers to the showroom because the industry expected vehicles to move off the shelf quickly. As a result, the offers and discounts were not attractive enough. However, the industry was caught on the wrong foot when sales failed to take-off due to sudden changes in insurance policy, the deepening of the IL&FS crisis, and the impact of a below average monsoon.
The industry was unable to predict this.
As a result, companies exited 2018-19 with high inventory levels. This time around, owing to a prolonged economic slowdown, companies are better prepared and hence the schemes are better crafted. “Most of it addresses financing issues, which has been one of the many pain points,” said an auto dealer.
PV manufacturers, on the other hand, which have been hit harder by the slowdown, have been wooing buyers with attractive offers for some time now, and two-wheeler companies joined the fray on Thursday.
From consumer offers that range from cash benefits, exchange schemes to competitive financing, makers of motorcycles scooters are leaving nothing to chance.
Take Honda Motorcycle and Scooters India (HMSI). The second-largest two-wheeler company by sales on Thursday launched the Honda Festival Dhamaka, a bundled offer that includes an attractive retail finance scheme. Buyers availing of the finance scheme can enjoy benefits of up to Rs 11,000.
Senior Vice-President Yadvinder Singh Guleria said HMSI had tied up with all the major credit-card companies, including 10 leading banks. It allows buyers to swipe their credit card, convert loans into an EMI, and ride home on a motorcycle or scooter. All the schemes will be supported by a 360-degree campaign, he said. “We believe there is a pent up demand in the market and it’s an opportunity for us to make the most of this,” said Guleria.
Two-wheeler market leader Hero MotoCorp too is offering incentives. These include financing with a low down payment and easy EMI. In order to address buyers looking for upgrades, it has introduced a festive exchange bonus of Rs 3,000. Buyers of the Xtreme range can avail of a special exchange bonus of Rs 5,000 across the country, said Sanjay Bhan, head of sales, aftersales, and parts at Hero MotoCorp. “We are confident the customers will benefit through our holistic range of benefits and schemes, covering sales and after-sales,” said Bhan.
The sales push is also attributable to the switch to BSVI emission norms, which take effect on April 1 next year. A similar cut-off date for both production and sales (as mandated by the Supreme) means that auto companies cannot afford to have any unsold stock left at the end of the festive season.
Pune-based Bajaj Auto is also going all out to get buyers. The company is offering a host of benefits of up to Rs 7,200, five free services, five years’ free warranty, and low down payment starting from Rs 3,537.
Rajiv Bajaj, managing director at Bajaj Auto, said, “The initial response (to the offers) suggests a very strong increase in enquiries across brands. We will know better once that begins translating into sales in the Navratras.” The schemes on offer by the industry, he added, should serve the twin objectives of enhancing share while normalising dealer stocks.
The 45-day period starting from Navratri is critical for auto companies because close to a third of annual sales of two-wheelers and 25 per cent of PVs are accounted for by this period. Company officials remain cautiously optimistic though they declined to offer any guidance on the festive season sales.
Yes Securities’ Jain, however, expects sales in the festive season this year to be either flat or decline to low single-digits over the same period last year despite the offers and a relatively low base last year.