Heavy Discounts by Car Companies Looking to Beat Cash Crunch Blues

CHENNAI: December has been a month of mega discounts for car marketers with top brands like Maruti, Hyundai, Honda and others offering anywhere between Rs 25,000-2 lakh in benefits. Car industry experts say the discount drive has worked and the industry should end the month with a small 5% growth over last December.

 
Even used cars are attracting benefits on online portals like Droom. The good news is that the channel and plant inventory, which had piled up due to the demonetisation effect in November, has now come under control, giving car makers the chance to start new year on a clean slate. Take Hyundai, which is offering between Rs 50,000-2 lakh benefits on models like i10, Xcent, Verna, Santa Fe and Eon. The car maker's December promotions are 10% higher than what is normal around this time of the year, said Rakesh Srivastava, senior VP-sales & marketing, Hyundai Motor India.
 
The push was needed to clear the backlog after the demonetisation hit in November. "The sudden announcement of demonetisation in November created market challenges which impacted customer sentiments," said Srivastava. "To effectively engage with customers we needed to enhance the promotional offers in addition to zero cash offers from finance companies. This counter measure has been effective. A 10% increase in promotions meant we will end up with a 5% growth over last December this month."
 
"Retail sales in November for the industry was low while wholesale numbers were good. Fewer people are dropping into showroom as the sentiment has been impacted. Industry inventory levels are also higher than normal and therefore this December, the discounts are also higher than normal," said Sumit Sawhney CEO of Renault India.Car marketers say this month may show a modest growth over last December but compared to November the retail growth will be impressive. "We are doing much better than last month and last weekend saw a 34-35% growth over November backed by a 20% increase in discounts over November," said Janeshwar Sen, senior VP-marketing & sales, Honda Cars India.
 
The discount rush isn't restricted to new cars alone. Online marketplace Droom is running year-end sale till January 1 offering up to Rs 50,000 off on top selling cars, bikes & scooters both used and new with guaranteed lowest pricing along with 50% off on road-side assistance and 30% off on warranty said founder-CEO Sandeep Aggarwal. Droom's top selling car models are Maruti Swift, Alto, Swift Dzire and Honda City among others.
 
Car marketers say the biggest trigger for the December discounts was the inventory pile up in November. "The December discounts have catered to the latent demand created in November and overall this will reduce the channel and plant inventory levels for car industry creating a good platform for 2017," said Hyundai's Srivastava. 

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