The festive season in India has arrived, and so have car discounts. And Maruti Suzuki India (MSI) has already outdone the competition to take the lead and make the most of this opportunity. Despite enjoying record sales month after month, and long waiting periods on most of its models, MSI has increased discounts this festival season compared to the ones offered last year.
Typically when demand surpasses supply, which is the situation right now with MSI, a company would do one of these two things – reduce the discounts or charge a premium. But Maruti’s course of action seems quite different. What could be the reason for that? Let’s find out.
Sources are saying that the company is doing this to beat the competition, even though it is finding it extremely difficult to meet the current demand. MSI, in contrast to Tata Motors, Hyundai Motor India and General Motors, who have stocked up, has a very limited inventory that would last about a week to 10 days.
“What Maruti is doing is enticing customers with deeper discounts even as it tells them to wait for buying cars. This is quite a unique situation, but in an intensely competitive scenario, Maruti has little choice,” said a source.
Maruti Suzuki Alto F8 and K-10 are facing strong competition from Hyundai Santro, Tata Indica and the Tata Nano, and there is almost no waiting period for these models. To make matters worse similar discounts are also available on these cars.
“Surprisingly, in spite of robust demand, discounts are similar or higher on most models compared to last year. Most surprising is the discount of the recently launched WagonR. It also highlights the fact that even though demand has surprised on the upside, competitive intensity in the space would keep margins muted,” said Jatin Chawla, analyst at IIFL.
MSI is offering a great Rs 42,000 discount on the old WagonR, but what is more surprising is that the company is offering Rs 19,000 discount on the new WagonR. A still bigger discount of Rs 60,000 is offered on the SX4 sedan. Despite the refurbishment and all, the SX4 is struggling because of the competition, and those who are intent on having a Maruti sedan, opt for the DZire instead.
Surprisingly, the discount on Swift, which is one of the best sellers, is merely Rs 5000. Currently, buyers of the diesel variants of the Swift and Swift Dzire are facing a waiting period of over six weeks. The newly launched Alto K-10 has a waiting period of over four weeks and the remaining cars about three weeks each. Only the M800 and some variants of the Estilo are available without a waiting period.