Tap year-end offers if planning to buy a new car

With companies planning to increase prices next year, deals are a good opportunity for potential car buyers

It's a bumper time for potential car buyers. A number of auto companies are offering year-end discounts that include exchange bonuses, free accessories and insurance among others. The benefits are even more in case of corporate customers.

Chevrolet, for example, is offering benefits of up to Rs 1 lakh on Beat, up to Rs 70,500 on Enjoy and Rs 60,000 on Cruze. Other models such as Sail, Spark, and Tavera too have such offers.

Maruti is offering benefits of up to Rs 75,000 on Ritz and Rs 15,000 on Alto K10 and Celerio. Hyundai Motor India, Tata Motors, and Mahindra & Mahindra are also offering such deals.

The deals kick in during the year-end as auto companies want to exhaust their old inventory.  If they are unable to do so, they will need to sell the cars at even lower prices, as customers won’t go for vehicles manufactured in the previous year.

Companies like Hyundai and Maruti Suzuki have also announced plans to hike prices from early 2015.

If you have been planning to get a new car, does it make sense to buy one now or delay the purchase?

For self-employed individuals, it does make sense to make a purchase now as they can claim tax benefit on their cars while the cost of acquisition is also low.

“Even if you buy car in the last week of December, you can claim depreciation for 180 days (July to December). This works out to be 7.5% this fiscal as a company can claim depreciation of 15% for the full financial year,” said a tax expert with KPMG.

Mayur Shah, executive director - tax & regulatory practice at Ernst & Young points out that the car needs to be in the name of the company from which the person is earning his/her income. In case of professionals such as doctors and consultants, they can buy it in their own name if they don’t have a firm.

For individuals too, the discounts do translate into huge savings. But financial planners warn that it should not be an impulsive buy only because the benefits are attractive.

“If you have a goal to buy a car this year, only then go for it. Acquiring such an expensive asset can put you back by a few lakhs and the impact is bigger if the person is taking a loan,” said Steven Fernandes, a certified financial planner.

He points out that many prefer to change their cars every three or four years though it can be used for about seven years.

It also makes sense to defer your purchase if the car you want to buy is about to get a facelift, says Yash Gandhi, a Nagpur-based auto dealer.