Every now and then comes a deal that not only gets us interested, but it goes so deep as to interest the finance whizzes and bean counters in our office as well. A Skoda dealer in Gujarat, Torque Auto, came out with this ad in a paper offering a Skoda Fabia free after five years if one buys a Skoda Rapid from them now, prompting everyone to start analyzing the lucrativeness of it.
An ad like that definitely gets attention. So we called the Skoda dealer at Anand (who appears to be swamped with phone calls and enquiries today) to get more information on this offer. On the face of it, the offer seems too good to be true, because apparently in five-years’ time you could either get a Skoda Fabia base variant (either petrol or diesel) free depending on the Rapid variant you buy, or you could opt for full cash payment of Rs. 3,50,000 in lieu of the same in case you don’t want the car. Obviously there are no discount offers on the Rapid, because the dealer would not want to hurt his profit margin further with such a deal, assuming he’s making a profit of 20% on the car (difference between the cost price of picking it up from Skoda to the ex-showroom price). Also read: Pros and cons of Skoda Rapid
What the dealer says
Torque Auto says the deal is a limited offer only valid on full bookings made on February 27 and February 28 only. Also there is more fine print with it. You have to make a down-payment of Rs. 1,00,000 on the Rapid and get the rest financed through either HDFC Bank or Axis Bank, which means there’s obviously some profit sharing between the dealer and the finance companies. At the end of five years you can opt to get a brand new Skoda Fabia (2018 model) or cash in lieu of the car.
The fact that this deal is on limited stock and valid only for two days points to it being a clearance sale of old stock of Skoda Rapids (the dealer did not specify if these were 2012 stock).
What’s to lose?
Of course, there are risks associated. What if the company discontinues the Fabia altogether (given that it’s not selling) or launches a much cheaper Fabia. But on the face of it, this seems like an interesting deal. Even if you don’t want the Fabia after five years, the Rs. 3,50,000 you get is like getting Rs. 200,000 off on the car at present value (back calculating at 10% compounding). If nothing else, this money kind of offsets your fuel expenses on the car to some extent.
The Skoda Rapid and Skoda Fabia share plenty of parts as they are based on similar platforms. The Fabia shares its engines with the Volkswagen Polo and the Skoda Rapid with the Volkswagen Vento. While the Rapid is still managing to sell a decent number of cars a month (about 1,500), the Fabia’s sales have dropped to just about 200 cars a month, prompting dealers to try and push sales. Also read: Video Review: Skoda Rapid
Image courtesy: Team-BHP