The initial months of the year 2011 saw a tremendous rise in the automobile sector but sudden decline in sales has forced auto companies and dealers to offer year-end discounts. High interest rates on automobile loans, fuel price hike, labour disputes and production loss have resulted in low rate of profit. The offers would strive to reduce stocks and help in recovering from the losses suffered. Cash discounts, zero interest rates, and free insurance are offered by a number of auto companies to avoid carrying car stocks to the next year.
Year-end price hike is a mechanism adopted by almost all the major auto companies in order to push the stagnating car sales. Maruti Suzuki India Limited (MSIL) has seen 17% fall in its volume to 607,417 units. Thus, the discounts offered by the company are higher than last year, with Rs. 30,000 on the Alto and A-Star hatchback, Rs. 25,000 on WagonR and Rs. 35,000 on Estilo. As diesel stands cheaper than petrol, the demand for diesel variants has increased in the recent months. As a matter of fact, most diesel variants are subjected to long waiting periods and discounts are offered on petrol-engined vehicles.
Korean auto major Hyundai Motor Company launched its compact car Eon amid slowdown. As the sales are getting affected adversely, the company, too, has announced cash discounts, exchange bonus and zero interest schemes. The rebates on i10 and Santro include exchange bonus and the amount depends upon the stock available with dealers. General Motors, Tata Motors and Ford India have also joined the league to offer Christmas and New Year discounts. The schemes are designed to attract customers at the end of year and thus incur maximum profits before 2011 culminates.
Tata Motors Limited is offering cash discounts of Rs. 10000 – Rs. 15000 on Nano along with rebate on diesel and petrol models of its passenger cars. The new diesel version of Fiesta and Figo are also offered with discounted prices. The new models of Auto Expo 2012 would help in boosting the automobile sector.
