'Cars In Mid-Sized Segment Overpriced By Rs 1 Lakh'

Egged on by the success of various financial schemes offered by Daewoo Motors during March and April, other manufacturers in the mid-sized car segment including Pal-Peugeot are contemplating similar sops to spruce up their sales charts.

The success of Daewoo has lend credence to the view that cars in the mid-sized segment are overpriced by about Rs 70,000-Rs 100,000, and this needs to be balanced by a combination of sops, an industry source said.

We can expect to see a proxy war soon between the major players as each tries to outdo the other in a bid to capture the buyer's fancy, he added.

 

Daewoo Motors had cut rates from 23 per cent to 14 per cent and offered reimbursement coupons worth Rs 20,000 on certain Cielo models in March and April.

This had helped the company emerge as leader in the mid-sized car segment with sales of 16,866 cars in 1996-97 as against 7,500 Opel Astras from GM for the same period. In March, Daewoo sold 1,613 cars as against 737 cars in January, a 118 per cent rise.

Daewoo followed up its success in March and April with another scheme of giving 200 cars for test driving for 18 months. It has also increased the dealers' incentive in May.

Daewoo has given benefits to the tune of nearly Rs 70,000 on each car during this period through different schemes. This has reflected in Cielo sales zooming from 710 and 737 in December 1996 and January 1997, to 1,613 in March and around 2,000 vehicles in April, the source said.

The pricing appears to be inflated in the mid-sized segment. It needs to be lowered by about Rs 60,000-Rs 100,000 for different models. The manufacturers of Opel, and Peugeot 309 are considering sops and discounts to boost sales, the source said.

Ford, too, is likely to come out with some attractive schemes once their sales cross a critical volume. Currently, the company is selling whatever it is producing, the source added.

However, even Ford is giving free tickets to London and back with its petrol vehicles, the source said. Besides, the manufacturers are also looking at an equalised monthly instalment made comparable or slightly higher than that in the case of the B-segment cars like Maruti 800 or the Zen, he added.

It may be mentioned that Opel Astra had sold 1,360 vehicles in December 1996, while Daewoo sold 710 Cielos during that period.

Mahindra Ford and Pal Peugeot had sold 507 and 200 cars, respectively, in December. In January 1997, Ford sold 714 units, Pal Peugeot sold 330 units, while Daewoo and GM sold 737 and 1,105 units, respectively. However, by March, Cielo had stolen a march over its competitors selling 1,613 units, while Opel, Ford and Pal-Peugeot sold 1,238, 770 and 433 units, respectively.