2017 Festive Season May Be Over, but Discount on Auto Continues

A protective cover sits over a Honda Jazz automobile on the company’s stand, ahead of the opening press day at the Geneva International Motor Show in Geneva. 

(Photo: Chris Ratcliffe/Bloomberg)

Automakers usually phase out discounts after the festival season and bring them back at the year-end to clear inventory. Not this time.

Most car and two-wheeler companies continue to lure buyers with up to 20 percent cash rebate after Diwali. That’s because of lacklustre retail sales in the period considered auspicious for buying, dealers of most automakers told BloombergQuint. The festival season began earlier this time in September-end.

Efforts to revive retail sales are at a variance with the wholesale numbers. Sales volumes of nearly all passenger vehicle makers have risen for three straight months. Demand revived as dealers rebuilt inventory after paring stock ahead of the Goods and Services Tax rollout in July, most companies have said.

Dealers disagree. Inventory piled up as automakers dumped cars on dealerships, they said requesting anonymity.

The average inventory level is four-five weeks, at least two weeks more than a year ago, said a senior official of the Federation of Automotive Dealers Association.

Emailed queries to automakers remained unanswered.

Maruti Suzuki India Ltd, the largest carmaker by volume with a 50 percent market share, has been the least affected by a retail slowdown. Its dealers said they hold the stock for three weeks.

The waiting period for its compact SUV Vitara Brezza and DZire sedan still runs into months. The company offers Rs 5,000 and Rs 30,000 off on the Eeco multi-purpose vehicle and the Wagon R mini-hatchback, respectively, dealers said. Sales of the two models have been declining.

Second-placed Hyundai Motor India Ltd offers a discount of Rs 1 lakh on its Grand i10 hatchback. Third-ranked Honda Cars India allows a similar rebate on its BR-V utility vehicle.

Mahindra & Mahindra Ltd, which increased prices of its sports utility vehicles after changes in GST rates, is willing to shave off Rs 70,000 on its XUV500. Renault India is taking a cut of up to Rs 1.35 lakh on the Duster SUV.

In the two-wheeler category, a stiff competition between market leader Hero MotoCorp Ltd and second-placed Honda Motorcycle and Scooter India means aggressive pricing.

Hero MotoCorp, which usually doesn't give discounts due to high demand, is offering a Rs 2,100 cashback on purchase via Paytm mobile wallet.

Bajaj Auto Ltd, left out of the fast-growing scooter market, offers a discount of up to Rs 5,500 on its motorcycles, about 20 percent more than 2016, its dealers said.

The average inventory level for two-wheelers was a little higher than six weeks, said the dealers’ association official quoted earlier.

The discount war is fiercer among truck makers, said dealers of Tata Motors Ltd and M&M’s commercial vehicles. Cash offers can go as high as Rs 6.5 lakh, or roughly 20 percent of the ex-showroom price.

(This article was originally published in BloombergQuint.)

(Breathe In, Breathe Out: Are you finding it tough to breathe polluted air? Join hands with FIT in partnership with #MyRightToBreathe to find a solution to pollution. Send in your suggestions to [e-mail] or WhatsApp @ [phone])