Discounts unlikely on top-selling car models this December

There is little or no discounts this December on the top selling 10 models that account for a significant chunk of total passenger vehicle sales. Traditionally, December is one of the best months for picking up a bargain. However, this year, incentives are on select models, with a few having the same incentive as November and many models with no discounts, according to data collated by Jato Dynamics.

Amongst the top selling 10 models, Suzuki Wagon R, Alto, Swift and Baleno have higher incentives this month while Suzuki Dzire and Tata Nexon have the same incentives as November. Hyundai Creta, Tata Punch, Suzuki Ertiga and Brezza have no offers.

The discounts increase when the production and wholesales supply is higher than the retail demand and discounts are used by manufacturers to reduce the consumer price and attract more buyers, say experts.
However, manufacturers say the discount levels are a function of demand and supply. “So some models have discounts due to higher supply and others not so, due to short supply, said Shashank Srivastav, senior ED, Maruti Suzuki. For example, industry top selling models by volume i.e Alto & Wagon R have discounts because of good supply whereas lower volume models like XL6 have no discount due to supply constraints, Srivastava added.

At present the retail demand is resilient; although OEMs still face challenges to produce as the chip supply shortage continues, said Ravi Bhatia, president, Jato Dynamics.

Body styles, which have the highest discounts, are hatchbacks and MPVs (multi purpose vehicles), followed by sedans and SUVs. “Pressure on demand is visible in the lower compact segment and in the SUV segment waiting periods are coming down with easing supplies. A few SUV models are also seeing discounts being offered as December being a month of year end model, said Hemal Thakkar, director, Crisil Market Intelligence & Analytics.

Consumers generally refrain from buying in December, unless incentivised because of the want of a new year tag. For this reason manufacturers and dealers try and keep low stock in factories and the dealerships. Many manufacturers like Maruti Suzuki take block shutdowns and production cuts this month to cut down on inventory levels.

So while wholesales are low this month, the last 5 years have seen higher retails as dealers and manufacturers offer attractive benefits in the form of cash discounts, exchange bonuses and sometimes free accessories to incentivise consumers. The buyers are lured to buy this month as most manufacturers have announced impending price hikes in region of 3-5%.

Sales of PVs have been on an upswing the last couple of months. In November it breached the 300,000 mark to touch 322,861 units, for the sixth straight month, reflecting sustained consumer demand despite steady increase in financing costs. The inventory position of PVs, as on November end stood at 245,000 units.