Automakers try new tactics in India

28 March 2013

NEW DELHI: Automakers are adopting strategies including deep discounts and "buy now, pay later" schemes in order to revive their sales in India's depressed automotive market.

"The slowdown has forced automakers to cut prices and offer massive discounts to move the metal," Ammar Master, India manager at global industry forecaster LMC Automotive, told The Economic Times.

Indian car sales dropped precipitously for the fourth month in a row in February 2013, with consumers fighting shy of big-ticket purchases due to a slowdown in GDP growth.


Companies are responding with discounts of up to 20%, while "buy now, pay later" offers are also proving popular. Volkswagen has even launched a "one rupee down payment" offer for its Vento model, with payments for the car beginning a year after purchase.

RC Bhargava, chairman of Maruti Suzuki, the Japanese-controlled carmaker, forecast that next year would not see an improvement in the car market.

"The industry is not going through a good phase," he said. "The trend can change only with better economic growth and more money in the hands of people."

The one bright spot over recent months has been SUVs, sales of which bucked the general trend by rising 35% in February.

It is this segment of the auto market that Fiat is betting on to revive its fortunes. The Italian company was one of the first Western carmakers to enter India is but now the worst performing, with a market share of 0.3%.

It is planning to launch its Chrysler Jeep in India this year and to build a smaller version there by 2015. Fiat is also looking at the higher end of the market with the Abarth, the sports version of its 500 and Punto models, while the firm also plans to open a new, fully-owned, 57-strong, dealer network on April 1 this year.

"Fiat will have to get its pricing and marketing strategy right for this model [segment] if its wants to be successful in India," said Master.

"We all believe that we have scratched the bottom of the barrel," Enrico Atanasio, managing director of Fiat India told Reuters. "[Our performance] is not what the brand deserves."

Data sourced from The Economic Times, Reuters; additional content by Warc staff