“The best car deal of the year is here!” screams a near-full-page newspaper advertisement of General Motors-owned Chevrolet, which has slashed the tag of one of its small cars by Rs 50,000. Ditto Italian auto brand Fiat, which is offering Rs 55,000 worth of benefits on the purchase of its Linea and Punto.
Likewise, almost all car makers are trying to catch consumers’ eyeballs by offering cash discounts, free insurance and paying registration charges of the car, distributing gift cheques, silver and gold coins and free accessories.
Auto companies are rushing to get rid of their stock lying at various sales outlets to make way for fresh vehicles due in January 2011. For faster mobilisation of the idle stock, extra offers are being made by the dealers.
While India’s biggest car maker Maruti Suzuki is offering a maximum value of Rs 40,000 on the SX4, the next biggest auto company Hyundai Motor India is offering benefits worth Rs 45,000 on the Verna (see table for more).
While December has traditionally been considered the best month for buying cars, analysts say since car makers are replacing models with upgrades while also getting rid of excessive stock in warehouses, the discount and other offers are unusually higher this year than before.
Some car makers have a different opinion.
P Balendran, V-P (corporate affairs), General Motors, said: “Our discount scheme has got nothing to do with the liquidation of stock. It is part of the celebration of 100 years of Chevrolet.”
General Motors has cut the price of Spark by Rs 50,000 and for Beat by Rs 21,000. Beat diesel is scheduled for debut next year. The company has also said that based on the response it gets, this offer could be extended till December 31, which otherwise lasts only till December 20.
It’s not just small cars and sedans that are being attractively priced by the companies. Sports utility vehicles such as the range of Mahindra Scorpio are also carrying a discount of Rs 50,000. M&M’s offer will last till the end of this month.
Such discounts and freebies are given out by companies at a time when raw material prices, which have risen by as much as 30 per cent in the last few months compared to the same period last year’s have put a strain on their margins.
While sales targets of almost all companies have exceeded their estimate, they are gearing up to make an upward revision in vehicle prices in the range of 1-3 per cent, which will come into effect from the first week of next month.
While high input costs are denting margins of car makers, dealers, however, are free to offer added discounts as most of them have met their sales targets for the festive period (October-December).
A dealer selling Maruti Suzuki cars in Mumbai said: “My sales objective for the period has been achieved with sales being more than what was projected. So, there is no pressure on our margins and, hence, we can do away with a part of it in an attempt to clock more sales."
Apart from General Motors, Maruti Suzuki, Tata Motors, Hyundai, Honda Siel, M&M and Toyota Kirloskar have finalised a price hike next month.
Some companies which have high localisation content in their vehicles are doing it to offset rising raw material costs, while others are compensating for the expensive Japanese currency.