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Auto firms lure buyers with discounts, EMI cut

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Swaraj Baggonkar Mumbai
Last Updated : Jan 29 2013 | 1:55 AM IST

With automotive sales entering into a sluggish period, leading commercial vehicle makers are enticing buyers by doling out discounts and lucrative finance options.

Tata Motors, for instance, recently run a scheme wherein commercial vehicle buyers would get three months’ waiver on equated monthly installments (EMIs) on the vehicle loan. The response, according to the company, was very positive.

Similarly, Eicher Motors, the country’s fourth largest CV manufacturer, is giving away discounts in the region of Rs 25,000-Rs 35,000 per vehicle, according to a company dealer. The discount was significantly higher than the regular, which is usually in the range of Rs 15,000-Rs 20,000.

Ashok Leyland, the country’s second biggest CV maker with a market share of more than 15 per cent, too, agreed that discounts and special finance scheme are being run by the company to boost sales at the dealers’ level.

Banks, meanwhile, are also trying to tighten lending criteria due to rising default cases. They have, therefore, shut some of the operational units in certain parts of the country.

“We had to tighten the borrowing norms due to rising delinquency rates recently,” said an executive of a leading bank.

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K Sridharan, chief financial officer, Ashok Leyland, said, “We are entering a difficult period where finance availability has become a problem.”

Rising input costs, such as auto grade steel, rubber, aluminium, plastics and man power, have forced the manufacturers to raise vehicle prices during first quarter of the current financial year. They are also planning to pass on the hike to consumers again to offset input costs partially.

At a recent press conference, Ravi Kant, managing director, Tata Motors, said, “We had raised prices during the first quarter (April-June), which had saved our margins ... we will have to look at more (price) hikes to balance the rise in input costs.”

The Reserve Bank of India (RBI) has hiked the repo rate and CRR to suck out liquidity from the country’s economic system. This has put pressure on sales of CVs in a cyclical format, believe experts.

In July, auto makers had witnessed a sluggishness in sales of the commercial vehicles. Tata Motors posted a growth of just eight per cent in sales at 22,381 units during the month as compared to 20,705 units in the same period last year.

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First Published: Aug 04 2008 | 12:00 AM IST

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