Faced with the grim prospect of slowing sales owing to liquidity crunch and high interest rates, Indian auto companies are now targeting government employees, who are slated to receive bulk payments for higher wages.
Most top car and utility vehicle makers, including Maruti Suzuki, Hyundai, General Motors and Tata Motors, are offering discounts, targeted specifically at government employees.
About 5 million employees are expected to benefit from the government’s move to raise its employees’ salary by as much as 70 per cent. The revised pay scales will be effective January 2006, which means that its employees will get bulk payments for past enhanced salaries.
“The employees can use the lumpsum payment to make a down payment for a small car,” said Arvind Saxena, senior vice-president (marketing and sales), Hyundai Motor India.
Elaborating Saxena said, “Suppose the amount is Rs 70,000-80,000. Then, the customer can easily afford an EMI of Rs 6,000-7,000. The EMI will not be heavy on the pocket as the individual will benefit from a higher salary.”
The company is offering a discount on the ex-showroom price ranging from Rs 10,000-31,000 on models such as Santro, i10, Getz, Accent and Verna. The company has also tied-up with banks, including State Bank of India, HDFC Bank and Axis Bank to finance packages for such employees.
Industry sources say that the country’s third largest car-maker, Tata Motors, is also likely to come out with a similar scheme for government employees. When contacted, a Tata Motors spokesperson said that the company does not divulge marketing plans.
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Similarly, US car-maker General Motors is offering a discount of Rs 3,000-5,000 on its models for buyers. This discount will be in addition to the prevailing ‘savings’ of up to Rs 58,000 on GM cars.
P Balendran, director and V-P (corporate affairs), General Motors India, said, “We are expecting a 30 per cent increase in sales in the festive period due to the ongoing special offer for government employees.” The company sells models such as Spark, U-VA, Aveo, Optra, Tavera and Captiva in the local market in the range of Rs 2.66 lakh to Rs 19 lakh.
The automobile industry has been hard hit by the central bank measures of raising interest rates aimed at controlling inflation.
Maruti Suzuki, the country’s biggest car-maker, has been hit the most with its sales recording a dismal increase of 4.5 per cent in the first six months of the current financial year.
To counter the sales slump, Maruti has launched an aggressive marketing campaign ‘Wheels of India’ in order to reach 4.6 million central government employees who will be directly benefitting from the hike.