Thinking of buying a car? Well there are discounts galore in the market. For instance, Hyundai Motor will pay for 200 litres of petrol if one buys a base version of Hyundai i20. There is free insurance and extended.......
Moneycontrol Bureau
Thinking of buying a car? Well there are discounts galore in the market. For instance, Hyundai Motor will pay for 200 litres of petrol if one buys a base version of Hyundai i20. There is free insurance and extended warranty on Hyundai i10.
Maruti Suzuki , India’s largest passenger car maker, is also not behind in the promotional race. It is offering cash discounts of around Rs 25,000 on its entry level car Alto.
Passenger car sales in India grew at a scorching 30% in 2010-11 (April-March). But with rising interest rates on auto loans and a sharp rise in petrol prices, car sales this year have slowed down to a crawl.
In fact passenger car sales crashed 16% in July and 10% in August, according to data by Society of Indian Auto Manufacturers (SIAM). Strike at Maruti Suzuki’s plant in Manesar, which had hit output of one of its most selling cars, the Swift hatchback, has only added to the pressure on overall industry sales.
SIAM has already cut its growth forecast for car sales to 10-12% from earlier 16-18%. Last month it said it would further downgrade growth forecast for the full year.
Research firm Crisil painted a bleak picture earlier in the week, saying it expects "growth in passenger vehicles to decelerate sharply to 2-4% with domestic cars growing at a mere 0-3% as against earlier forecast of a growth of 8-10%."
Crisil said its latest downgrade was prompted by Rs 3 rise in petrol price and 25 basis points hike in interest rates by Reserve Bank of India in September.
Other analysts, like Nikhil Deshpande of Pinc Research and Sejal Jhunjhunwala of Way2Wealth Securities too agree that sentiments are not looking good this year, despite the ongoing festive season.
"Automakers had expected car sales to pickup in the festive season. But there were two conditions -- interest rate hike cycle would peak out and fuel prices wouldn’t rise. But there has been no respite on either front," Deshpande told moneycontrol.com
No wonder then the automakers are going all out to tempt customers now, with more offers this year than last year, in the hope that people will spend impulsively during Dassera-Diwali. Fiat India, for instance, is offering benefits up to Rs 1.30 lakh on its Linea sedan, and Rs 75,000 on the Punto hatchback. Fiat’s offer includes insurance at Rs 1, exchange benefits, gift cheque and free road side assistance for 50 months.
This year demand for diesel engine cars has gone up sharply as the difference between petrol and diesel prices has widened. Analysts say there is industry-wide capacity constraint for diesel engines due to this more-than-anticipated increase in demand for diesel cars. Therefore companies like Toyota are offering some discounts on their petrol models.
Such promotions may lift passenger car sales, but it may also weigh on margins, which have already been under pressure for several quarters due to high input costs.
It’s a case of slow sales hurting overall earnings, or sales increasing via promotions, but at the cost of some margins.
Jhunjhunwala of Way2Wealth and Deshpande of Pinc expect the discounts will continue for some more time as the inclination will be towards increasing sales first.....back
Moneycontrol Bureau
Thinking of buying a car? Well there are discounts galore in the market. For instance, Hyundai Motor will pay for 200 litres of petrol if one buys a base version of Hyundai i20. There is free insurance and extended warranty on Hyundai i10.
Maruti Suzuki , India’s largest passenger car maker, is also not behind in the promotional race. It is offering cash discounts of around Rs 25,000 on its entry level car Alto.
Passenger car sales in India grew at a scorching 30% in 2010-11 (April-March). But with rising interest rates on auto loans and a sharp rise in petrol prices, car sales this year have slowed down to a crawl.
In fact passenger car sales crashed 16% in July and 10% in August, according to data by Society of Indian Auto Manufacturers (SIAM). Strike at Maruti Suzuki’s plant in Manesar, which had hit output of one of its most selling cars, the Swift hatchback, has only added to the pressure on overall industry sales.
SIAM has already cut its growth forecast for car sales to 10-12% from earlier 16-18%. Last month it said it would further downgrade growth forecast for the full year.
Research firm Crisil painted a bleak picture earlier in the week, saying it expects "growth in passenger vehicles to decelerate sharply to 2-4% with domestic cars growing at a mere 0-3% as against earlier forecast of a growth of 8-10%."
Crisil said its latest downgrade was prompted by Rs 3 rise in petrol price and 25 basis points hike in interest rates by Reserve Bank of India in September.
Other analysts, like Nikhil Deshpande of Pinc Research and Sejal Jhunjhunwala of Way2Wealth Securities too agree that sentiments are not looking good this year, despite the ongoing festive season.
"Automakers had expected car sales to pickup in the festive season. But there were two conditions -- interest rate hike cycle would peak out and fuel prices wouldn’t rise. But there has been no respite on either front," Deshpande told moneycontrol.com
No wonder then the automakers are going all out to tempt customers now, with more offers this year than last year, in the hope that people will spend impulsively during Dassera-Diwali. Fiat India, for instance, is offering benefits up to Rs 1.30 lakh on its Linea sedan, and Rs 75,000 on the Punto hatchback. Fiat’s offer includes insurance at Rs 1, exchange benefits, gift cheque and free road side assistance for 50 months.
This year demand for diesel engine cars has gone up sharply as the difference between petrol and diesel prices has widened. Analysts say there is industry-wide capacity constraint for diesel engines due to this more-than-anticipated increase in demand for diesel cars. Therefore companies like Toyota are offering some discounts on their petrol models.
Such promotions may lift passenger car sales, but it may also weigh on margins, which have already been under pressure for several quarters due to high input costs.
It’s a case of slow sales hurting overall earnings, or sales increasing via promotions, but at the cost of some margins.
Jhunjhunwala of Way2Wealth and Deshpande of Pinc expect the discounts will continue for some more time as the inclination will be towards increasing sales first.....back