With domestic passenger car sales set to fall, the first decline in a decade, automobile manufacturers are lining up innovative offers to increase footfall in showrooms and cut inventory levels, which have touched record highs.
Topping the list of these companies is Tata Motors. After recording a decline in volumes in the last two months, the company has slashed the prices of its Indica, Indigo and Manza range of cars by up to Rs 50,000. To lure consumers, it has also launched a buy-back programme for its Manza sedan, offering buyers an assured 60 per cent return on the car's purchase price after three years.
For small car Nano, the company has introduced a scheme through which consumers can pay through Axis Bank, ICICI Bank, HSBC Bank, Kotak Mahindra Bank and Standard Chartered Bank credit cards. The buyer would have the option to convert the entire amount into equated monthly instalments (EMIs) at zero per cent interest, to be paid through 12 months. The EMI would be Rs 8,333 for every Rs 1 lakh.
European car maker Volkswagen, which has also seen sales slide, is offering consumers the option of driving out of a company showroom in a new Vento sedan, in exchange for an old car and a payment of Rs 1. Customers have to pay the remaining amount after a year or in EMIs through three years.
Group company SKODA is offering a deferred EMI option on purchases of the Rapid, its C-segment sedan. SKODA Finance is providing finance for the Rapid, with an option of a one-year EMI holiday. The customer would have to pay only 15 per cent of the car's price as down payment.
An analyst at a leading advisory firm said, "While discounts and freebies have been on offer for most part of the year, car makers are now designing special schemes to increase conversion rates and turning footfall into sales. The stocks in the industry are nearly double the normal levels and companies are taking a hit on inventory costs."
Maruti Suzuki, which has about 1,00,000 cars in its supply chain, is offering a one-gm gold coin on a booking of the Alto 800 or the Alto K10, in addition to benefits of up to Rs 43,000 on the models in the form of cash discounts, exchange bonuses and discounted accessories. Total savings on buying a WagonR may be up to Rs 53,000. The Estilo is available at a special price of Rs 3.46 lakh.
While Hyundai is offering an interest rate of 0.99 per cent on the i10, Honda is offering 0.10 per cent interest on the City sedan. "We had seen a similar trend in 2008. The cost of ownership has gone up and now, companies are trying to partially offset that by doling out benefits," said Abdul Majeed, partner and leader (automotive practice), PricewaterhouseCoopers.