Auto cos eye pay panel bonanza

The pay arrears bonanza for Govt employees brings good news not only for the 5 million employees directly affected by it but also for the automobile industry and finance companies who have been battling a slowdown over the last quarter.

The pay arrears bonanza for government employees brings good news not only for the 5 million employees directly affected by it but also for the automobile industry and finance companies who have been battling a slowdown over the last quarter.

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With 40 per cent of the arrears—Rs 11,600 crore—accrued since 2006 already in the hands of central government employees, car companies in the country believe it is a pool full of prospective car buyers. The first signs are already there with enquiries from government officials increasing in dealerships.

“There has been a spurt in the number of enquiries from government employees in our showroom,” said a Sunrise Hyundai dealership executive. “Last week as many as six lawyers have made enquiries and atleast four of them are likely to finalise their purchase in the next couple of days.”

Companies have started working on customised marketing strategies to lure this segment into making the purchase.“We are looking at them (govt emoployees) closely and though we have not planned anything specific for them, we are ensuring immediate service on enquiries,” said N R Narayanan, head-vehicle loans, ICICI bank ltd. “This month, with two major festivals falling together, is very crucial for us and we are trying to generate as much demand as possible. The pay revision will certainly help.”

Market leader Maruti Suzuki India Ltd., which already has a government employee oriented scheme — Wheels of India— in its kitty, is also banking on robust demand from this segment. The company provides lower rates of interest and additional discounts under the current scheme.

“Our team started working on this from last year itself and it has always been a part of our strategy,” said Mayank Pareek, executive officer, marketing and sales, Maruti Suzuki India Ltd “Our existing Wheels of India scheme is a precursor to what we are doing now. With so much money in the hands of government employees now, some of them are bound to purchase cars.”

With sales declining for two consecutive months in July and August, the pay revision comes at a very opportune time for the auto industry. Festivities apart, the arrears have resulted in industry expecting a double digit growth during the month.

“This is a big opportunity for us and a recurrent one as it will be followed by state pay commissions,” Pareek said.