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Rediff.com  » Business » Good news! Bonanza for car buyers this festive season
This article was first published 13 years ago

Good news! Bonanza for car buyers this festive season

Last updated on: September 29, 2011 13:24 IST

Image: A car is displayed at a headquarters of the Hyundai Kia Automotive Group in Seoul.
Photographs: Truth Leem/Reuters Dipta Joshi in Mumbai

High fuel prices and high interest rates on car loans may be a dampener for potential customers.

But, with car manufacturers and even dealers offering freebies and discounts, one may as well loosen one's purse strings. 

Buy a base version i20, costing Rs 540,000, and manufacturer Hyundai Motors will pay for 200 litres of petrol, a saving of Rs 12,800.

On an i10, you can get free insurance, extended warranty and cash discounts. 

. . .

 

Good news! Bonanza for car buyers this festive season

Image: A rickshaw-puller peddles in front of a billboard for the WagonR, a car manufactured by Maruti Suzuki.
Photographs: Babu Babu/Reuters

Maruti is using cash discounts of Rs 25,000 to fast-sell the Alto's base model.

The amount increases by Rs 15,000 in case of an exchange and another Rs 3,000 if a corporate customer.

That adds to Rs 43,000, for a car worth Rs 3,18,000. 

Offers on Volkswagen's Polo Breeze and Vento Breeze include select features like a satellite navigation system, rear park distance control, touchscreen multimedia player with GPS and USB, besides free accessories at no extra cost.

Or you could opt for a cheaper interest rate, of 6.99 per cent. 

. . .

Good news! Bonanza for car buyers this festive season

Image: Visitors walk past two Volkswagen Polo cars at the 59th Frankfurt car show.
Photographs: Kai Pfaffenbach/Reuters

The base petrol versions for the Polo Breeze and Vento Breeze cost Rs 533,000 and Rs 840,000, respectively. 

Car manufacturers agree that rising inflation levels, fuel prices and interest rates have all had an impact on affordability.

However, says Neeraj Garg, director, Volkswagen Passenger Cars, "In a depressed market, if manufacturers are able to ease the owning of a car with options like reduced interest rates, it does bring in customer delight."

. . .

Good news! Bonanza for car buyers this festive season

Image: The new Logan cars gets ready to roll out from M&M's Nashik plant.
Photographs: Punit Paranjpe/Reuters

Though various schemes are launched at different times, the offers are much more tempting on account of the festival season, when employees are likely to receive their bonuses.

Also, customers are more likely to spend impulsively if they think they are getting a good deal, say car dealers who are pitching to make the offers more exciting. 

Arvind Saksena, director, sales and marketing, Hyundai, says: "The discounts being offered are actually a combination of support by the car manufacturer and the car dealer who actually interacts with the customer."

So, while Mahindra & Mahindra is offering free insurance worth Rs 35,000, a four-year warranty and free accessories worth Rs 2,000 on its top-end Zylo model, you could get an extra accessories worth Rs 5,000 as a festive offer from the dealer. 

. . .

Good news! Bonanza for car buyers this festive season

Image: Newly assembled Hyundai i10 cars are parked at a Hyundai plant in Sriperumbudur Taluk, Tamil Nadu.
Photographs: Babu Babu/Reuters

Does this mean the dealer will actually pay from his own pocket?

Not always, say insiders.

Bigger dealers, with large volumes, may be able to pass on extra benefits to the customer.

But in most cases, the overall discount, whether in the form of free insurance, accessories, extended warranty or cash discounts, will still be within the prescribed kitty kept aside by the company for such promotional activities.

Say, the free insurance (worth Rs 12,000), an extra year of warranty (Rs 3,997) and a cash discount (Rs 3,500) being given on the i10 add to Rs 19,000.

. . .

 

Good news! Bonanza for car buyers this festive season

Image: Diwali celebrations at the Bombay Stock Exchange.
Photographs: Reuters

This may have well been the discount earmarked.

 Which is why customers have the flexibility to choose one type of discount over the other.

Volkswagen's second offer on the Polo and the Vento includes a bouquet offer where the customer can pick and choose from a menu of items valued at Rs 40,000.

These include free insurance, extended warranty, free accessories or even a reduced interest rate of 6.99 per cent.

Dealers say opting for upfront cash discounts is always a better idea.

Even when compared to reduced interest rate offers that remain fixed for the chosen term.

. . .

Good news! Bonanza for car buyers this festive season

Image: Vehicles move slowly during morning rush hour in Hyderabad.
Photographs: Krishnendu Halder/Reuters

Currently, the Volkswagen offer is at 6.99 per cent, which, when compared to the existing 11-12 per cent rates for three to five years on car loans, is attractive.

The dealer's reason: "Discounts are inbuilt in the loans before interest rates can be arrived at. But if you foreclose the loan before the planned term, you miss using the entire benefit of the discount."  

A similar scheme (at 5.99 per cent) offered by Hyundai Motors a couple of months earlier was closed on the back of rising interest rates. 

(Prices mentioned are on-road, Mumbai prices)

Source: source