Tata Motors to offer discounts as sales slump

Tata Motors, India's biggest maker of commercial vehicles, will offer more discounts to counter a four-month sales slump, with interest rates in the country at a five-year high.

"We would like to see sales improve, but that would depend a lot on external factors,'' Managing Director Ravi Kant said in Mumbai on Thursday. "We are looking at providing more incentives to get customers.'' He didn't give more details on the discounts.

Higher loan rates have curbed sales of cars, trucks and buses this year in Asia's fourth-largest economy. Tata Motors joined Bajaj Auto and Hero Honda Motors in cutting production as sales slumped starting in June.

Hero Honda and TVS Motor have delayed opening factories as sales decline. India's central bank has raised its policy rates by 2.25 percentage points in the past three years to curb inflation in the world's fastest-growing major economy after China.

The discounts "are bound to put pressure on their profit margins,'' said U P Bhat, who helps manage the equivalent of $820 million at Canbank Mutual Fund in Mumbai, including Tata Motors shares. "Competition is getting intense and that's forcing companies to offer price discounts and other freebies.''

Tata Motors, also India's third-largest carmaker, joins companies such as Maruti Suzuki India, the country's largest carmaker, in offering discounts for vehicles.

Maruti's dealers are offering discounts of Rs 45,000 ($1,100) on the WagonR model in New Delhi, while Tata Motors is offering savings of Rs 61,000 on the Indigo Marina sedan.