New Delhi: It’s now a buyer’s market for cars in India.
In a bid to reduce rising inventories before the year ends, auto makers are expected to aggressively push sales, resulting in higher discounts this December.
Rising inventories:Maruti Swift in production in a Haryana plant. Sales of cars and bikes have been hit badly this fiscal. Ramesh Pathania / Mint
“Discounts this year should be better than last year as carmakers look to liquidate stock,” said Sanjay Thukral, general manager at Sanya Automobiles Pvt. Ltd, a Tata Motors Ltd dealership in Delhi.
Vehicle sales typically drop in December as buyers wait till the new year to buy cars as resale values are decided on the year of purchase. Cars bought a few days apart but in different years could have significant differences in resale prices.
But it is dealers, and not manufacturers, who take the hit on any loss suffered due to unsold cars at the end of the year. So, dealer discounts increase as the month progresses, particularly after the 20th of the month, auto dealers say.
This year is different as sales of cars and bikes have been hit badly this fiscal, falling for four of the past five months, according to data from industry body Society of Indian Automobile Manufacturers.
Buyers of Maruti Suzuki India Ltd’s Wagon-R hatchback can pay Rs35,000 less or Chevrolet Spark, manufactured by General Motors India Pvt. Ltd, stand to save as much as Rs58,000. Ford India Pvt. Ltd has a special price for buyers of the Ford Fiesta: Rs5.29 lakh—at least Rs91,000 less than the old price, Rs6.20 lakh.
Hyundai Motor India Ltd is offering its flagship Santro compact car at Rs2.99 lakh, a price the company described as a 10-year-old price. Other models, too, will enjoy free insurance, exchange bonus and free accessories.
Car sales were down 6.6% in the festive month of October and slid further in November. Maruti Suzuki, Hyundai and Tata Motors, which account for about 90% of cars sold, said November sales declined by at least 12%.
Rising inventories have already prompted some carmakers and two-wheeler manufacturers to shut down production for a few days last month and similar moves are expected this month.
“Unlike Indian manufactures who might still be able to hold stock, foreign companies are under pressure to release money that is tied up in stock,” says Pankaj Chadha, director automotive practice at management consultancy Ernst and Young.
General Motors, for instance, has launched a trade-in discount for its Chevrolet Aveo and Optra models. Customers turning in their old cars will get a discount of Rs20,000. “This is the first time we’re offering this scheme on these models,” said Ankush Arora, vice-president, sales and marketing, General Motors.