Dealers Deflate Esteem Discounts

Discounts on the Maruti Esteem slumped from as much as Rs 20,000 to Rs 25,000 per car a week ago to Rs 10,000 yesterday after Maruti Udyog (MUL) told its dealers not to go overboard in their discount schemes.

MULs Zen still commands a Rs 2,000-Rs 3,000 premium with a waiting list of more than a month indicating there is no fall in the popularity of the car.

Dealers say discounts crashed after the company directed them to stop giving high discounts on the model.

What we are doing is virtually giving away our entire margin to the customers so as to meet monthly targets since we will get lesser cars as delivery is based on the performance of the previous month ", a dealer said.

 

Observers say the discounts were propelled by lower offtake of the Esteem, especially with newer models in the same category by other manufacturers and the slash in prices of Daewoo Cielos GLE version by Rs 1.3 lakh and the GLX by Rs 1.1 lakh. They added MUL had asked dealers to call off the large discounts once it was able to meet its monthly sales target for the car.

MUL executives, however, have a different version to the changes in the pricing. A senior executive said this was a result of the fortnightly delivery cycles which the company has with the dealers.

"If we get less payment from a particular region then we deliver a lesser number of cars for the next fortnight which determines the discount or premium.

He said the company did not indulge in discounting and also has a band within which it advises its dealers to offer discounts. "If dealers go overborad we calibrate or temper them" he added. He denied the discounts were in response to Cielos price cuts . The Rs 25,000 discount had actually reduced the gap between the Esteem VX, priced at Rs 5.35 lakh, and Cielos GLE manual version.

On the Esteem VX model there is a discount of Rs 5000-Rs 10,000.