When a slowdown wafts in, it’s time for car companies and dealers alike to gird their loins and offer generous cash rebates and freebies on to lure customers — and manage inventories.
The headline-grabbing deal is being offered by Europe's largest carmaker, Volkswagen, which is giving a mind-boggling Rs25 lakh cash discount on its top-of-the-line but sluggish-on-sales Phaeton.
The car that retails for over Rs75 lakh in India and competes with the likes of BMW 7 series, Mercedes S class and Audi A8 globally, was launched last year in January more as a brand building exercise for the German carmaker than with any hope of capturing the market. But like everywhere else in the world, the Phaeton has been a dud in India as well, with only 53 units sold in over 18 months.
“There is a cash discount of Rs25 lakh on the car but it will take a month for the car to be delivered as it is not readily available in stock,” said a sales executive at a VW dealership in Delhi. The company officials themselves could not be contacted for a response.
The Phaeton was launched worldwide in 2002 as Volkswagen’s reposte to rival Mercedes’ onslaught at the volumes segment with its low-cost A-Class compact car.
Though the factory has a 20,000-unit annual capacity, it operates at a third of that level due to low sales.
The slowdown in domestic car sales is affecting other companies as well, especially in the small cars segment. Car sales growth has come down to 9% in the first quarter of 2011-12, after seven consecutive quarters of double-digits growth. Firms have no choice but to offer discounts and freebies.
Some of these discounts like in the case of Honda Jazz and Audi A6 are also intended towards stock clearance ahead of the launch of facelifted versions. Honda was offering a massive Rs1.7 lakh off on the Jazz last week, while some Audi dealers are giving discounts to the tune of over Rs3 lakh on existing stocks of luxury sedan A6.