Auto companies offer freebies to revive sales

As sales slowed to a crawl, carmakers have pulled out all stops by offering unprecedented discounts to potential customers, in a bid to revive sales and reduce inventory pileup. From incentives to two wheeler owners to buy new cars, potential customers have been offered trips, cash offers and freebies that start from Rs 35,000 for popular cars to almost Rs 2 lakh on premium cars.

Customers preferring Maruti's most popular offering — the Alto800 — have a three-day paid trip to holiday destinations in India as the carmaker gives a fillip to sales and correct swelling inventories. The customer has to pay Rs 1,399, for availing the trip. German carmaker Volkswagen's Indian subsidiary has an offer that gives a customer an option to own a Vento sedan by paying half the cost of its flagship car upfront, against the regular price of about Rs 8 lakh, with the balance amount paid in the following year.

In certain extreme cases, cars are even made available to customers at almost interest-free loans. Japanese carmaker Toyota is sharing three instalments, commonly called equated monthly instalment, or EMI, on loans taken by a new Etios customer. Honda Car India is offering 0.01% interest rate for Brio and City. Honda is also enticing customers who are using its bikes and scooters to upgrade to cars by offering huge loyalty bonuses.

"We are tapping the larger customer base of the two-wheeler market by offering loyalty bonus of up to Rs 20,000 a car to anyone owning a Honda branded motorcycle or scooter," says Jnaneshwar Sen, Honda senior vice president (marketing & sales).

"The fresh bouquet of schemes has fired up the market. We haven't seen such rebates and interest schemes in the past four years. We expect to gain sales momentum in the last week to register decent tally in February," says Rakesh Srivastava, vice-president (marketing & sales) Hyundai Auto India.

Manufacturers' desperation to sell cars in a muted market also comes from their commitments to meet fiscal sales targets, that have forced them to inject fresh dose of freebies for customers, who are cowed by ballooning inflation, rising fuel costs and high interest rates. According to industry sources, the declining 'delivery rates' in the past two months had set alarm bells ringing for carmakers. That meant customers were booking cars, but not taking deliveries. 

The general trend in India is that 80% of the bookings by customers eventually take delivery. "It has fallen drastically. In the last two months, only 60% of them actually followed it up by taking delivery, signalling challenging times in 2013," said a senior Maruti Suzuki executive, who did not want to be named. Car sales for the month of January slipped 12.45% over last year and pushed the Indian industry to its weakest growth in the past nine years.

Now the impending dangers of worst times looming ahead, as predicted by India's automakers' body — the Society of Indian Automobile Manufacturers (Siam) — that all sales targets are going haywire, manufacturers are pushing for extreme measures. Besides the older cars, the desperation to attract customers has brought newly launched models in recent months under the discount hammer. Tata Motors' Manza Club Class car, which was unveiled in the domestic market last October, comes with a Rs 50,000 benefit.

The Alto 800 launched in the same month is one of the highly-discounted cars offering close to about Rs 30,000 as freebies. It allows a customer about 12.4% rebate on the ex-showroom price. Nissan multi-utility vehicle, Evalia, launched in October last year, also comes with a Rs 30,000 discount while Chevy Sail hatchback that debuted in November comes with Rs 20,000 waiver on its ex-showroom price tag. The highest discount comes from Czech carmaker Skoda that is offering Rs 2 lakh rebates on its popular sedans.

"There's a trend to attract potential buyers with sops. Companies have intensified their goodies in the form of cash discounts, free insurance, loyalty exchange bonus and accessories to overcome slowing demand, resulting in the high levels of freebies. It fetches the best opportunity to buy new cars at pre-budget prices," said Abdul Majeed, a partner with Price Waterhouse India, a global consulting firm.

Given the bleak scenario, automakers have also refreshed several models into limited editions to excite customers with sporty features and extra accessories. Volkswagen has launched Polo SR in India. It comes with Aero Sport package that includes fresh front and side skirting rear spoiler and 15-inch alloy wheels.

"The Polo SR is a good choice for those looking to own a sporty hatchback from out product line to excite customers," said Arvind Saxena, MD, Volkswagen Passenger Cars. The facelifts and special offers are also available for the cheapest models. Maruti Suzuki launched a 2013 limited edition of its cheapest van, the Omni, that starts at a price of Rs 2.17 lakh with left hand side rear view mirror, floor mats & seat covers, music player with auxiliary port and multiple speakers as a standard feature.

South Korean carmaker Hyundai would debut a limited edition of its successful i10 hatchback next with additional features of rear view camera and fresh mint interiors. The auto companies are not optimistic of the near future as they started the new year on a harsher note.

This comes on the back of new successful launches like the Maruti Suzuki Ertiga, Renault Duster, Chevrolet Sail U-VA, Honda Brio Automatic & CR-V, Renault Scala, Nissan Evalia, Mahindra Quanto, SsangYong Rexton, amongst others, that failed to arrest growth and which may well continue into 2013. Hopes of revival, however, are pinned on the upcoming union Budget for some turnaround surprises.

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