Business Today

Auto companies offer discounts to boost sales

As rising petrol price takes its toll on car sales that slipped to 20-month lows in the last three months, auto makers are offering dangling discounts before the customers to boost their sales.

Mail Today Bureau | June 24, 2011 | Updated 17:18 IST

As rising petrol price takes its toll on car sales volumes, auto makers have begun dangling discounts before the customers to boost their sales. After posting robust growth in 2010, car sales have slipped to 20-month lows in the last three months due to rise in fuel prices and auto loan rates.

According to Edelweiss Securities, sales of passenger cars in India are likely to slow down to 10 per cent in the current fiscal, as consumers hit by increased loan rates and a sharp rise in petrol prices apply brakes on their buying plans.

"We were certainly not expecting the 2010 numbers, but the fuel price hike coupled with high auto loan rates have really played spoilsport for the sector. Sales are affected in the last two months," Shashank Srivastav, chief general manger (marketing), Maruti Suzuki India Ltd (MSIL), said.

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Industry leader Maruti Suzuki is offering discounts in the range of Rs 15,000-Rs 26,000 on many of its models. US car maker General Motors is offering cash discounts ranging from Rs 10,000 on its Aveo model to Rs 1.34 lakh on its sports utility vehicle (SUV) offering Tavera. The company is also offering free insurance and accessories for the Chevrolet Beat. Recently, Japanese auto major Honda Siel slashed the prices of its flagship sedan City by up to Rs 66,000.

And Volkswagen , which recently hiked the price of the diesel Vento, is offering a promotional interest rate of 6.99 per cent on the petrol variant till June 30. Besides the discounts, auto companies are also re-working their sales strategies and are increasing their marketing spends to attract buyers.

MSIL has already increased its marketing budget by 20 per cent. The firm is currently running four campaigns - one each for Alto, SX4, WagonR and Estilo - while a fifth campaign is being planned to push the sales of Swift. Maruti Suzuki is also working on offering special financing schemes for its various models with a view to increase sales further. However, the mileage rallies organised by the company last month for its small cars Alto, Estilo and WagonR did not fare as well as expected.

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According to dealers, sales of petrol cars have been worst hit, with potential buyers postponing their buying plans or switching over to buying diesel cars. This has forced many auto makers to promote their diesel models. Those auto makers that do not have any diesel models to offer are rushing to launch diesel models of their hatchbacks.

According to Karl Slym, president, General Motors India, "If you look at the composition of the hatchback segment 80 per cent sales are of diesel and 20 per cent of petrol (models)."

Courtesy: Mail Today 

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