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Honda, Maruti, Hyundai offer discounts and freebies to spur car sales

By Motortrend India Staff   |   14 July,2011

Carmakers are offering the best discounts and freebies in two years on almost all vehicles to woo customers back to showrooms and regain momentum after sales growth slowed to a crawling 1.6 percent in June.

Honda set the mood with a stunning Rs 1.7 lakh limited-period waiver on its struggling hatchback Honda Jazz on Monday, while market leader Maruti Suzuki offers rebates of more than Rs 50,000 on Alto, WagonR and Estilo that together account for half its sales.

“We are just reacting to the market. Retail sales have taken a hit with a huge slump in customer’s responses. To maintain our sales tempo, we have maximized the benefits on high selling models like Alto and WagonR in July as overall sales had turned negative in June,” Maruti’s chief general manager (marketing) Shashank Srivastava said.

After growing a breakneck 30 percent last fiscal on the back of a 26 percent gain in 2009-10, the Indian car market started a slowdown in April amid rising loan rates and higher fuel prices and hit a 26-month low in June.

Now there seems to be a discount war. Carmakers are following the international trend of charging lower interest rates on auto loans as part of the discount.

Interest rates have increased by up to 300 basis points in one year due to the central bank’s policy rate hikes to control inflation. Volkswagen is offering loans at 6.99 percent interest rate on its Vento petrol sedan, while luxury carmakers Mercedes and Audi are offering zero interest loans on C Class sedan and Audi A4 sedan, respectively.

“The companies are tying to structure deals to bring down the total cost for the customers through direct rebates or discounted interest rates to cut their piled up stocks,” a Mumbaibased banker said. “With a possibility of interest rates rising in coming months, we expect the discount regime to continue till September and beyond the festive season,” added the person, requesting anonymity.

Some Honda Siel officials and dealers, meanwhile, said the company wants to clear the inventory of the current Jazz model with this steep discount offer and that it will launch a face-lifted version of the premium hatch soon.

Jazz could not match its rivals Hyundai i20, Maruti Swift and Volkswagen Polo in sales mostly because of its premium pricing of more than Rs 7 lakh. Its sales dipped 39 percent in the April-June quarter to 643 cars, down from 1,050 sales a year earlier.

Honda Siel is also offering Rs 50,000 discount on its top-selling City sedan on top of last month’s Rs 66,000 price cut as car companies work overtime to revive sales. Hyundai Motor India offers up to Rs 45,000 discount on its popular i10 and Santro compact cars.

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