Year-end discounts on cars rise to the highest in 4 years

If you are looking to buy a new car, this could be the best time for it. Year-end discounts from carmakers have risen to a four-year high as pentup demand starts drying up on the back of improved production. Dealerships are making the deal sweeter with benefits ranging from ₹25,000 to ₹1,00,000.

Driving this trend is the softening of demand in certain car segments and fuel types. To shore up sales, most carmakers are offering discounts between 4.5% and 5% on their vehicles this month compared with 2-2.5% two years ago.

The most generous price benefits are in the entry-level car segment and the petrol segment of sports utility vehicles (SUVs), thanks to a mix of cash discount from automakers, exchange bonus benefit, lower own damage premium by insurance companies, and schemes run by dealers.

Discount on CNG vehicles, too, has increased to an all-time high of about ₹60,000 as buyers are giving CNG models a miss owing to the narrowing price gap between the green fuel and fossil fuel.

While carmakers are not worried about the larger discounts this time round – given that they have a robust order book of 417,000 units and there’s expectation of a strong retail in December – they are cautious of the road ahead.

Tarun Garg, director (sales, marketing and service) at Hyundai Motor India, said retail in December is strong and is expected to be 20% higher than November. But he said “the demand momentum, going forward, will depend on multiple factors like inflation, interest rates and general market sentiment”.

Maruti Suzuki India is offering discounts from ₹17,000 to ₹18,000. This is on par with the discount levels of 2018-19, said Shashank Srivastava, senior executive officer at Maruti.
“Unlike in 2018-19, the yearend discounts are confined to certain segments and the trend is not secular. In terms of demand and enquiries, the momentum remains strong. Having said that, we cannot afford to take our eyes off the headwinds, such as high interest rates and inflation,” said Srivastava. According to him, discounts on the entry-level models should be seen as a reflection of better availability instead of a tepid demand.

“Dealer inventories are back to pre-pandemic levels of 45-50 days,” Puneet Gupta, director at S&P Mobility, said, adding that this is mounting pressure on dealers to liquidate the vehicle even if they have to offer discounts. The increase in interest rates has added to their woes, Gupta said. Demand for electric cars, too, appears to be waning. The waiting period for Tata Motors‘ e-Nexon is down from a few months earlier to let a buyer walk into a dealership and drive out in a new vehicle.

Year-end Discountson Cars Rise at theirHighest in 4 Years

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