It's Raining Discounts On Cars!

'We are seeing one of the highest discounts in recent years across companies.'
'October is a crucial month with several festivals coming up.'

Carmakers are raining discounts on customers in 2024, and with sales dipping by 4.53 per cent in August, more incentives are being lined up to lure buyers this festive season.

While the average discounts across the top 13 players increased by 12 per cent so far in 2024, compared to the entire 2023, the companies are going all out this festive season with discounts starting from Rs 20,000 to up to Rs 3.15 lakh across brands, depending on their demand.

Companies like Maruti Suzuki, Hyundai Motor, Tata Motors, Mahindra and Mahindra, and Honda Cars are leading from the front in terms of festive sops.

Interestingly, in the 2023 festival period, discounts were in the range of Rs 25,000 to over Rs 100,000 for various models, which was higher than the 2022 levels by around 40 to 45 per cent.

Based on industry data, the average discounts by the top 13 players in 2023 were Rs 34,630, which increased to Rs 38,816 so far in 2024.

According to data shared by Jato Dynamics, Toyota and Honda are the two companies that have more than doubled their discounts so far in 2024 (See Chart I).

The average discounts by Toyota jumped 140 per cent to Rs 49,914 this year, compared to Rs 20,795 in 2023. Similarly, Honda saw a 120 per cent rise in discounts during the same period from Rs 15,412 to Rs 33,930.

Among the other companies, Volkswagen saw a 70 per cent, Tata Motors around 64 per cent, Hyundai around 50 per cent, and Mahindra around 29 per cent rise in discounts compared to last year.

According to industry experts, this festive season is seeing high discounts, following a dip in recent sales, owing to lower rural demand.

"We are seeing one of the highest discounts in recent years across companies. October is a crucial month with several festivals coming up. As discounts may differ from dealer to dealer and state to state, it will be difficult to come up with an average," said C S Vigneshwar, who took charge as the 37th president of the Federation of Automobile Dealers Associations (FADA) on Wednesday.

Jeep India is seeing one of the highest discounts in the market, going up to around Rs 315,000 on the Compass, including a cash discount of around Rs 215,000.

Market leader Maruti Suzuki is offering discounts starting from Rs 15,000 to Rs 100,000 till the end of September, across models like Swift, Celerio, Brezza, Alto K10, Eeco, Jimny, Fronx, Baleno and Ignis.

Jimny is seeing one of the highest discounts among Maruti models, ranging up to around Rs 100,000.

On the other hand, a Hyundai dealer in Chennai said that Hyundai Alcazar is seeing the highest discount in its fold at around Rs 200,000, while for Verna it can go up to around Rs 70,000, and around Rs 55,000 for Venue.

In addition to this, dealers are also adding insurance discounts and several other sops.

"On average, discounts range between Rs 40,000 to Rs 80,000 across models," the Chennai dealer said.

For Tata Motors, the discounts start from Rs 30,000 for Tigor, Rs 45,000 for Altroz, Rs 65,000 for Tiago, around Rs 80,000 for Nexon, around Rs 160,000 for Harrier, and Rs 189,000 for Safari.

This week, the Mumbai-based automaker, which is India's leading electric vehicle player, slashed prices of several EVs in its portfolio as part of the 'Festival of Cars' campaign that is running till October 31.

Prices of Nexon EV have been reduced by up to Rs 3 lakh, and Punch EV has discounts of up to Rs 1.2 lakh. Tiago EV prices have been cut by Rs 40,000.

In addition to price reductions, Tata.ev is offering six months of free charging at over 5,500 Tata Power charging points across India.

Following the cuts, Tata Tiago EV will now start at Rs 7.99 lakh, while the Punch EV will cost Rs 9.99 lakh.

The Nexon EV will start at Rs 12.49 lakh, the Tata group firm said in a statement.

The company further added that the move would help in 'mainstreaming' electric vehicles in the country and accelerate adoption.

Ravi Bhatia, president and director, Jato Dynamics, said that the 'pain' of lower demand is likely to continue for some more time, and the industry will emerge healthier.

"The car packaging and pricing moved up significantly over the last few years. I think we are witnessing a mild-mid correction," Bhatia said.

"The festival window is short, and original equipment manufacturers (OEMs) are approaching it from four sides: Price correction, incentives, extended financing, scrapping and trade-in, and production adjustment," he said.

Bhatia added that the pain is likely to continue for some more time, and the industry will emerge healthier.

"We are beginning to see high discounts by all OEMs, and Maruti seems to be still holding back. We have also seen price cuts," he said.

Mahindra & Mahindra (M&M) is offering discounts of up to Rs 1.1 lakh on XUV300 (diesel) and up to Rs 97,000 for petrol versions.

The Bolero also has discounts of up to Rs 85,000 tp rS 89,000 or so, while the Thar 4WD has discounts of up to Rs 15,000.

Meanwhile, the Scorpio-N, particularly the 2023 models, has discounts ranging from Rs 40,000 to Rs 100,000.

Although the regular XUV700 does not have any discounts this month, the 2023 models come with lucrative deals, offering discounts between Rs 110,000 and Rs 150,000 on various variants across the country.

Mahindra's electric offering, the XUV400, has significant discounts of up to Rs 275,000. A Chennai-based dealer said XUV700 offers are coming from Rs 190,000 and for Thar it is around Rs 100,000.

OEM price cuts come amid significant inventory buildup at dealerships.

The Federation of Automobile Dealers Associations (FADA) said last week that passenger vehicle inventory levels at the end of August have reached alarming levels, with stock days now stretching to 70 to 75 days and inventory totalling 780,000 vehicles, valued at a staggering Rs 77,800 crore (Rs 778 billion).

The numbers in both volume and value terms are 7 per cent higher than July, indicating that dealers' requests to car manufacturers to calibrate dispatches have gone unheeded.

Passenger vehicle wholesales in July have slipped by 2.5 per cent as OEMs have recalibrated their dispatches to dealers in the wake of high unsold inventory lying at the retailers' end. This is after growing by 3 per cent in June.

Feature Presentation: Ashish Narsale/Rediff.com