Auto Makers Unleash Offers’ Offensive, Making Customer the ‘Absolute King’

By Rohit Vaid

To arrest the sales decline triggered by the Covid-19 pandemic, players in the luxury automobile space have gone on an offers' offensive, making customer the 'Absolute King'.

On offer are direct discounts and indirect value added propositions like 'free insurance' and 'service packs'.

Accordingly, discounts ranging from 5 to as much as 8.5 per cent on ultra-luxury cars and SUVs are being bestowed.

The high price tag on these vehicle has resulted in a mindboggling discounted value.

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On a broad range, these discounts depending on the actual price will range from Rs 2.5 to Rs 8.5 lakh and beyond.

Apart from discounts, indirect offers such as attractive financing solutions, minimum resale value, free insurance or service warranty from 3 to 5 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, upto 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 5 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 Rs 39,999 for the C-Class. With a 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 auto maker, BMW Group India is offering 'Easy Start' and 'BMW 360' which provide for exclusive financial packages.

Under the 'Easy Start' programme, the company is offering upto 40 per cent lower equated monthly instalments 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.

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Besides, the luxury auto maker is also offering 'Service Inclusive and Service Inclusive Plus' which further reduce 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 5 years or 100,000 km.

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 Rs 57,900 in addition to an annual bullet of Rs 4.07 lakh.

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, ICRA.

"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, Grant Thornton Bharat LLP: "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 ( Sept 20 over Sept 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."

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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." (IANS)