NEW DELHI: Maruti Suzuki India Ltd, the country’s largest passenger vehicle manufacturer, on Thursday announced the launch of its vehicle leasing service, Maruti Suzuki Subscribe, as the company seeks to promote different forms of vehicle ownership models at a time when affordability of customers has taken a sharp hit due to the covid-19 induced economic slowdown.
The New Delhi-based car maker has tied up with Orix Auto Infrastructure Services Limited, a subsidiary of Orix Corporation, Japan, to launch vehicle leading service for the Indian market, the company said in a regulatory filing.
“Through this, the company would offer cars for subscription as a pilot project in Gurugram and Bengaluru. The subscription will be initially available on Swift, Dzire, Vitara Brezza and Ertiga from Maruti Suzuki Arena channel and Baleno, Ciaz and XL6 from Nexa channel," statement further noted.
Mint, on May 28, reported that Maruti Suzuki India Ltd is exploring the possibility of entering the vehicle leasing business for its retail customers. The plan has been in the works for about a year and is being spearheaded by a special projects team of the company.
The local unit of Suzuki Motor Corp will follow some of its closest rivals such as Hyundai Motor India Ltd and Mahindra and Mahindra Ltd (M&M), who already offer their vehicles on lease.
This strategy would open up an additional revenue stream for Maruti and its stakeholders at a time when domestic automobile sales are expected to slump this year due to the covid-19-induced economic crisis.
Vehicle leasing services are popular in developed markets such as the US and Europe, while in India, automakers have started this service for the past about two years. Maruti has previously ventured into the vehicle leasing space for corporates but without any major success.
Competitors such as Hyundai and Mahindra are already present in this segment through tie-ups with vehicle leasing startups. In 2018, Hyundai made an undisclosed investment in Revv, while Mumbai-based M&M also invested around ₹176 crore in Zoomcar.
Sales of passenger vehicles could decline in the range of 22-25% in FY21 due to lockdown measures to contain the spread of covid-19, and drop in affordability of customers as result of the economic slowdown, according to credit ratings agency ICRA. In the April to June quarter, sales may drop by almost 80% year on year, added the ratings agency.
Hence, car makers are looking at ways to reduce cost of ownership of vehicles and vehicle leasing seems to be a cost effective alternative for urban customers.