Freebies on diesel cars too as overall demand drops

The Indian car market is facing low demand for cars such that even diesel cars, which have been seeing higher demand due to their lower running cost because of the petrol-diesel price difference, are witnessing a slowdown. A few carmakers have now started to slowly dole out offers on diesel cars as well to push sales.

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Photo: Maruti SX4 has been steadily losing market share

“The market environment is tough. Almost all manufacturers have free availability of diesel vehicles, and the waiting lists for some have come down significantly,” Michael Boneham, President & MD, Ford India was quoted as saying by the Economic Times.

P Balendran, VP, corporate affairs, GM India, said that even though the price difference between petrol and diesel is about Rs 34 a litre, the demand for diesel cars has not picked up as much as expected, because of high interest rates, inflation and negative sentiment. All carmakers are eyeing the festival season in October for a pick up in demand. Petrol cars such as the Swift, i20, Etios, and even some diesel vehicles such as the Polo, Vento, Bolero and Scorpio are available with very little waiting periods. The waiting period on the Swift and Verna has reduced. The only cars with long waiting periods include the XUV500 and Ertiga.

Unlike last year, where there were no offers on diesel cars due to strong demand, carmakers now offer some discounts on diesel cars. For instance, Maruti Suzuki offers up to Rs. 70,000 benefits on the SX4 diesel while Tata Motors offer total benefits of Rs. 40,000 (cash discounts & exchange bonus) on models such as Indica, Indigo eCS, Vista and Manza.

Sales of cars (including diesel engine variants) have dropped in the recent months. Maruti Suzuki SX4 lost traction as its sales stood at 405 units in May 2012 while Tata Motors witnessed 20 percent drop in sales of its Indigo (including Manza) models this year.

Meanwhile, car makers are also focusing on value added services to impress car buyers. Hyundai, for instance, is apparently planning an online portal for Hyundai car owners, which would maintain the service history of registered Hyundai vehicles and remind owners about periodic service. This will also list parts cost and service costs. BMW India has setup its own call centre to provide information services to all its customers, and process test-drive requests. Further, BMW India has also begun its leasing service since February 2012 in order to improve sales. BMW has invested Rs.530 crore for product and service offering. Toyota is offering 100 per cent financing, insurance financing and eight-hour loan approval process to woo buyers. Toyota Financial Services India (TFSI) kick started in India with an initial investment of Rs. 260 crore and offers finances in NCR. The firm plans to gradually expand to other metros in the current fiscal year.