Dealers are reporting pile-up of stocks due to the slowdown

It’s that time of the year when car-makers rain discounts to entice buyers and clear their inventory. This year, intense competition has forced car makers to offer freebies of unprecedented magnitude to exhaust heavy pile-up of stocks due to the slowdown.

The freebies include price reduction, extended warrantee, low interest car loans, extended maintenance and free insurance.

Volkswagen Finance has made this offer for loans up to Rs.7 lakh.

In this ‘offer of the year’ the company is also providing free insurance. Volkswagen did not respond to a detailed questionnaire on the rationale behind this offer.

Tata Motors is offering special cash benefits up to Rs.1.30 lakh for its Manza (petrol) and is offering finance up to 90 per cent of on-road price. Nano comes with benefits of up to Rs.40,000.

Hyundai Motor is offering total savings of up to Rs.54,250 for its i10. Honda is offering total benefits of Rs.2.40 lakh for Accord. Ford and Toyota also have offers.

Audi is providing finance up to 90 per cent of on-road price. Analysts believe that it makes sense to announce tempting offers to dispose of stocks even at a loss, as after December the model will fetch lower resale value for the buyer.

“The slowdown, high interest rates and lack of clarity on petroleum policy has added to the woes of OEMs (original equipment manufacturers). The passenger car segment is affected and there is a problem in liquidity. When a company makes a zero per cent interest offer, it attracts lot of attention.

It is a big benefit for the buyer when interest rates are in the range of 11-12 per cent,” said Abdul Majeed, partner, Pricewaterhouse and head of auto practice.

“OEMs will try to sell whatever has remained unsold during the festive season. It is better to get rid of the stock and move on,” Mr. Majeed said.

Dealers have also reported huge pile-up of stocks. “Since April, the situation is very bad. A huge amount of stock needs to be cleared. Production can not stop. All car companies are making offers to clear the inventory. This will continue,” said Kasturilal Wasan, managing director, Wasan Motors, which has Ford and Toyota.

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