Discounts on offer for brand new models

Indians can now buy some mint car models at much reduced prices as sluggish demand has forced carmakers to bring almost every car that hit the market in the festive season under the discount hammer.

The newly discounted models include market leader Maruti Suzuki's big-bang debut, the Alto 800, which is available at 16,000 off on its on-road price in its seventh week of launch, and Nissan's MPV Evalia, which comes with 20,000 discount bonanza from its dealers. The Chevy Sail hatchback that hit the market in November too comes loaded with freebies worth 15,000 as companies aim to drive sales in a weaker December.

The festive season, which generally brings in double digit growth, was muted and even the new launches, facelifts and refreshes failed to bring much cheer, barring a few like the Alto 800 and some utility vehicles.

With sales slumping into a four-year low in November and market sentiment remaining subdued in December, carmakers have increased discounts and freebies significantly on most models to push sales in December.

Mayank Pareek, chief operating officer (marketing & sales) at Maruti Suzuki said. "Discounts on cars in December are at the all time high and now many diesel cars that had robust demand earlier have also hit the rebate path," he said in a recent media interaction.

Maruti had managed to increase sales of its petrol compact cars by 16% during September-November when it sold 1,30,589 compact petrol cars including Alto 800, Alto, A Star and Wagon R.

According to executives of various car companies, the average discounts on cars range between 13% and 18% in December compared to 8%-15% last year. Popular models such as Maruti WagonR, Hyundai i10, Tata Indica and Toyota Liva are coming with discount packages of up to 60,000 and exchange offers. Yet, experts expect December to be a low month.

"We are not excepting any turnaround in sales even as freebies and discounts touch their highest point of 2012 as the macro economic conditions have not changed. Inflation and interest rates on auto loans continue to be high that is pushing back customers to buy new cars," Sageraj Bariya Managing Partner at Mumbai-based research firm Equitorials, said.

With high interest rates, rising fuel prices and slowing economic growth expected to keep overall consumer sentiment low, they expect the tough times to continue next year as well.

"We expect the trend to continue in the larger part of 2013 also," Bariya said.

STRUGGLING TO SPEED UP

Most models launch in 2012 with the exception of Maruti Ertiga, Renault Duster and DZire sedan have been dwindling on the sales chart.

A dozen new cars including utility vehicles were launched this festive season including Maruti Suzuki's Alto 800, General Motor's Sail U-VA hatchback, Mahindra & Mahindra's Quanto and Rexton, and Nissan's Evalia. Also, there were significant facelifts from GM and Ford of Spark and Figo, and refreshes from Toyota, Tata Motors and Volkswagen.

Barring Alto 800 and Quanto, most new launches have failed to excite the market.

Sail U-VA hatchback, launched to take on Maruti Swift, managed sales of just 1,600 units in the month of Diwali while Swift did about 14,000 units. Japanese carmaker Nissan managed to sell just 457 units of its Evalia multi-purpose vehicle in two months against its own expectation of selling at least 2,000 units in a month.

Lowell Paddock, MD of General Motors India, said, "We expect to perform in tandem with market growth." He said the market continues to remain sluggish due to high interest rates, high fuel prices, high input costs, inflation and negative sentiment.

Sriram Padmanabhan, general manager, marketing, at Ford India, said the company is happy with the going of the new Ford Figo, and will stick to its plans to launch eight new products by mid-decade with the EcoSport being the second of the line-up to be launched next year.

A Volkswagen Passenger Car India spokesperson said the company expects next year to bring in some cheer. "This year the key market drivers like interest rate, fuel prices have not displayed optimistic signs for the industry, we are sure the year 2013 will bring in some cheer in the market," the person said.

Experts say, with festive season and new launches not delivering much, the industry is hoping for some government support in the upcoming budget to revive the sentiment.