December auto dealer report: Steep discounts for entry-level cars

Automakers are rolling out steep discounts for customers to clear stocks, especially for slow-moving or entry-level vehicles. Schemes on passenger vehicles, despite record sales, indicate vehicle makers are matching supply to demand by clearing out unsold inventory.

Speaking to CNBC-TV18, Nikunj Sanghi, MD of JS Fourwheel Motors said that there is stress at the entry-level segment and the discounts are likely to continue.

“There are very big waiting periods that the mid-segment and the higher segment, including SUVs and compact SUVs. Now what is really not pushing retail is entry-level cars. I think that's what gives volumes to a number of players and they would definitely want those numbers to come back. So I guess the discounts will continue even post-December is my opinion,” he said.

Talking about the extent of discounts Sanghi said, “If you look at Maruti the discounts are ranging anywhere from Rs 45,000 to about Rs 60,000 which is almost 5 percent of the value of the car which according to me is very steep. Normally discounts are ranging from 1.50-2 percent.”

He added that products like Mahindra Bolero and XUV300 have discounts of about Rs 1 lakh which is again around 5 percent of the value of the vehicle.

Sanghi believes that this would be one of the steepest discounts that we can see on entry-level cars.

Vinkesh Gulati, Director of United Automobiles told to CNBC-TV18 that the kind of walk-ins and bookings they are getting even for the entry segment is good, but the conversions are still slow.

He said, “Overall inquiry levels are good, I am hoping that the conversions will improve as we go to the month's end which is around the 20th or later. So positive side for the entry segment and November had been good so hopefully same continuing should be there in December also.”