Two-wheel deals

Bike and scooter makers are teaming up with finance companies to attract buyers

It's the best time of the year to find great deals. Taking advantage of the festive season, manufacturers and retailers everywhere are rolling out the red carpet for customers.

The two-wheeler market is no exception. With competition heating up, bike and scooter manufacturers and finance companies are doing all they can to attract customers.

If you already had a mean machine on your shopping list, here are some good reasons to go get it now. The festival season spells better offers in terms of discounts, freebies and attractive loan schemes. More importantly, with a possibility of an interest rate hike, it is better to take advantage of prevailing rates.

So here's the low-down on the offers. Bajaj Auto, along with ICICI, is offering its Pulsar customers free registration and insurance through its dealers. It also has a tie-up with HDFC, where Pulsar customers will get 200 litres of fuel free in Mumbai till the end of this month.

Market leader Hero Honda, which sells over two lakh bikes every month, is wooing customers by offering a free Reliance phone connection worth approximately Rs 3,500 with any bike model. An HDFC account holder also gets free insurance regardless of the model.

In some cities, HDFC is also offering free registration or a dinner set to Hero Honda customers. Registration costs are roughly Rs 2,900 "" the amount you save as a customer. "The promotions are a mix of national and regional offers depending on the market," says S Ramakrishnan, senior vice president-retail assets, HDFC.

So, for example, ICICI is offering free registration and insurance in all metros; mobile handsets, mobile accessories, mobile connection or a camera in cities in Punjab and Chandigarh; free travel bags or dinner sets in Madhya Pradesh; free gold coins or idols in Uttar Pradesh, Rajasthan, Kerala and Andhra Pradesh.

Tamil Nadu residents can also opt for a free domestic holiday. ICICI's promotion for Hero Honda customers also includes a lower interest rate. At 13 per cent for Hero Honda customers, equated monthly installments on a Rs 40,000 loan for 36 months have fallen from Rs 1,445 to Rs 1,348.

Hosur-based TVS is running a Sona Looto offer for customers buying the Victor, Fiero or Centra. Each customer will get a 3-gm gold coin worth Rs 1,800 with the bike.

The nationwide promotion also involves a scratch card contest and 25 lucky winners will be able to get into a Tanishq showroom and grab as much gold as they can in one minute. Of course, there's an upper limit: you can't walk away with jewellery worth more than Rs 2.5 lakh.

TVS has also tied up with financiers like HDFC and ICICI to offer a 14-inch LG colour TV (in some states the offer is for a 20-inch colour TV). Says a senior company official, "The peak purchase season is critical for manufacturers to get volumes. Instead of plain brand campaigns, the focus is on sales promotions and new product launches to maximise numbers." The third quarter accounts for 30 per cent of TVS's annual sales.

Similarly, Pune-based Kinetic is offering gifts on its scooterette Zing 80. A customer can choose between a digital camera, a DVD player and a Tanishq pendant and earring set. If you buy a Kinetic Nova 135, you will be given a voucher worth Rs 1,500.

It's not just freebies. There are also better interest rates and discounts. For example, Honda, a relatively new entrant in the motorcycle market, has tied up with ICICI to offer an 8.4 per cent interest rate and up to 96 per cent of the value of its Unicorn model. This is compared to the 13-16 per cent interest rate that ICICI offers on two-wheeler loans. HDFC's tie-up with Honda Unicorn customers includes a 100 per cent finance on the bike at a 16-18 per cent rate. The difference between ICICI's and HDFC's rate is that ICICI's rate is flat rate, meaning that 8.4 per cent will be charged on the loan amount for the entire tenure rather than a simple interest reducing balance calculation.

HDFC is also leveraging its existing customer base. For existing customers, the bank is waiving the last two equated monthly installments and the 2 per cent processing fee, regardless of the model.

However, you should also consider public sector banks for two-wheeler loans. A low cost of funds means that public sector bank rates range between 10.5-12 per cent, compared to the 13-18 per cent range offered by private sector banks. Also, processing fees are a percentage point lower.

"We offer speedy approvals, better service and have various other costs like commissions to dealers, which is why our rates are higher," says Sachin Khandelwal, head- vehicle finance, ICICI.

But if you don't mind a slight delay in approvals and prefer cheaper finance, then banks like State Bank of India (SBI) and Bank of Baroda (BOB) are offering lower rates in the festival season. For instance, BOB has waived the processing and documentation fees on all its two-wheeler loans till March 31, 2005.

However, there are no changes in the 12 per cent interest rate on two-wheeler loans. Like other players, BOB offers loans up to Rs 1 lakh for any two-wheeler for a duration of up to 60 months. However, BOB does not levy any prepayment penalty and the outstanding interest is computed on a monthly rest.

SBI has introduced a concessional rate of 10.5 per cent on two-wheeler loans as compared to the usual 11 per cent. A customer can get an in-principal approval till the 15th of this month and choose a model till the year end for final sanction.

Says Dinesh Pandey, assistant general manager and business head-personal banking, SBI, "The idea is to gain more customers in an extremely competitive market."

It's also worth checking with your local dealers about what's on offer. Apart from manufacturers and finance companies, dealers too offer customised discounts or gifts. While the players ride up their numbers, customers can zoom away with the best deal from the many choices available.