Though many car makers have hiked prices from this month, discounts and other customer benefit schemes will continue for new purchases at least for this quarter.
Last week, car makers announced increase in prices of their models after the expiry of excise duty benefits, adding to the price hikes that were already announced to offset higher input costs.
Industry hopes that the latest price hikes do not dampen consumer sentiments. Since the demand recovery has not been inclusive, companies are keen to continue the special incentives and schemes for new purchases. But discounts are reported to have come down to normal level when compared with December.
“Discounts are one of the tools at our disposal to attract consumer attention. Although no automobile manufacturer will like to resort to the option of employing discounts to augment vehicle sales, the economic factors like high interest rates, high fuel prices and higher than normal inflation rates did not leave us with many options,” according to Mayank Pareek, President– Passenger Vehicle Business Unit, Tata Motors.
“The removal of excise duty benefits at this stage will make the industry recovery all the more sluggish. Hence, to keep the customer excited about our product offerings, we will continue to provide compelling incentives to the market in the foreseeable future,” he added.
Tata Motors is presently offering discounts ranging from Rs. 20,000 to Rs. 50,000, depending on the model. But, General Motors India offers benefits up to Rs.1.08 lakh by way of special offers, loyalty bonus and other discounts.
Rakesh Srivastava, Senior Vice-President – Sales and Marketing, Hyundai Motor India, said the discounts would continue for some more time. Dealers across the country offer special schemes depending on the demand throughout the year. But in December, discount levels were higher by 15-20 per cent due to year-end stock clearance and price hike fears. Now, it has been restored to normal levels, he added.
Ajay Srinivasan, Director, Crisil Research, admitted that discounts would continue till the uncertainty over growth lingered. “Players had offered high discounts on models to push sales during the year. Average discounts on Maruti models in December 2014 were almost Rs. 10,000 more than a year ago,” he added.
Sales were up just two per cent during the October–December 2014 quarter, with November and December months clocking a growth of 5 and 10 per cent, respectively, compensating for a decline in October.
However, January-March 2015 quarter is expected to see weak sales due to higher prices along with lower demand as cus tomers advanced purchases to benefit from the lower prices in December. “We expect sales to grow by a modest 4 per cent during the quarter over the corresponding period last year,” said Mr.Srinivasan. During April-December 2014, passenger car sales grew by just 2.46 per cent at 1.85 million units.
