As Covid bites, luxury auto brands unleash offers offensive in India
Low monthly payments, assured buy-back value and flexible end-of-term options, among so many others, are what auto brands in India are offering to entice customers.
New Delhi - High price tag on these vehicles has resulted in mind-boggling discounted value
To arrest the sales decline triggered by the Covid-19 pandemic, players in India's luxury automobile space have gone on an offers' offensive, making customers the 'Absolute King'.
On offer are direct discounts and indirect value added propositions like free insurance and service packs. Accordingly, discounts ranging from five to as much as 8.5 per cent on ultra-luxury cars and SUVs are being bestowed.
The high price tag on these vehicles has resulted in a mind-boggling discounted value. On a broad range, these discounts depending on the actual price will range from Rs250,000 to Rs850,000 and beyond.
Apart from discounts, indirect offers such as attractive financing solutions, minimum resale value, free insurance or service warranty from three to five years and other such provisions are being dished out.
"We have commenced our 'Festive Celebration Programmes' on certain products for this festive season," Balbir Singh Dhillon, head of Audi India, told IANS.
"This may include a lower rate of interest or a peace of mind package up to five years. In addition, for existing customers, we are making re-purchase and upgrades easier through special 'Loyalty and Exchange Programmes'. We have also tied up with banks to provide a low EMI, for customers who wish to buy a pre-owned car through our 'Audi Approved Plus' dealerships."
"We are seeing positive customer sentiment in the luxury car market and anticipate it to become even stronger with the upcoming festive season. We also anticipate the pre-owned car business to further pick up steam during the festive period."
Just prior to the festive season, the company has introduced the Audi Q2.
It was launched with a 'Complimentary Peace of Mind' benefit bundled with a five-year service package with "2+3 years Extended Warranty and 2+3 years Road Side Assistance".
On its part, Mercedes-Benz India is offering attractive financial packages with 'Unlock Celebrations' campaign for the festive season.
The luxury auto maker is offering benefits to customers which include low EMI starting from Rs39,999 for the C-Class, with an RoI of 7.99 per cent and complimentary first year insurance amongst others.
Recently, it reported a marked recovery in sales with an off-take of 5,007 units in the period from January to September 2020.
Another luxury automaker, BMW Group India, is offering 'Easy Start' and 'BMW 360', which provides exclusive financial packages.
Under the 'Easy Start' programme, the company is offering up to 40 per cent lower equated monthly installments for the first 2.5 years. Further, the offer provides for low rate of interest that differs depending on the model.
The BMW 360 scheme offers low monthly payments, assured buy-back value and flexible end-of-term options. A big advantage is the guaranteed buy-back value which is immune to market fluctuations and is computed on the ex-showroom price instead of retail price.
As part of ongoing festive offers, BMW India Financial Services is offering an effective rate of interest as low as 5.55 per cent on select models.
Besides, the luxury auto maker is also offering 'Service Inclusive and Service Inclusive Plus', which further reduces cost of ownership.
Other promotional schemes in the market are offering the Mini Countryman Cooper S at 6.99 per cent rate of interest with complimentary service package of five years or 100,000km.
But these prices might not remain low for long, as BMW Group India has announced that it will increase prices across the BMW and MINI product portfolio with effect from November 1, due to rising costs and depreciating currency.
Other players such as JLR are providing Land Rover Discovery Sport with attractive 'Finance Offers EMI' from Rs57,900 in addition to an annual bullet of Rs407,000.
Industry insiders have cited the massive contraction in sales as the trigger for such a trend.
As per estimates, a sales decline between 25 and 40 per cent is expected during the calendar year 2020.
"All major luxury car OEMs are offering discounts either directly [cash discount, exchange bonus, loyalty bonuses] or indirectly by attractive financing solutions," said Ashish Modani, vice-president of the ICRA.
"The ICRA expects over 40 per cent contraction in luxury car volume during CY2020, as demand was already weak during Q1CY2020 and Covid-19 related lockdown further dented demand during Q2CY2020."
According to Sridhar V., partner at Grant Thornton Bharat: "While PV volumes have been healthy and in general have done well in the recent months post-lockdown the luxury segment has been struggling with a significant dip in volume [September 20 over September 19 has seen a dip of 27 per cent], which has made them focus on discounts and other monetary benefits to push the sales."
"We are also seeing some of the luxury car makers coming up with smaller sedans and SUV from their portfolio to catch the attention of the younger customers and those looking at reasonable price points to own such brands."
However, not all direct offers are standard across models, some are even given by certain dealerships.
"Some older variants, especially diesel guzzlers are being de-stocked by dealerships, they are the ones giving discounts," an industry insider told IANS.
"However, not many units are available with the dealerships as new and refreshed models are constantly being added."