Right time to drive away with freebies

Continuing with the 'upside to the downside' of interest rates hike, you stand to benefit more as a consumer wanting to purchase a car or a bike than a house. That's because car manufacturers may be forced to increase the freebies they are offering today to sell their cars, unlike builders who may try to hold on to current prices for some time. Consider the existing freebies.

If you buy a Swift-petrol in Delhi, you could get accessories worth ₹18,000, on Wagor R-petrol; it is worth ₹15,000; on Alto, 50 per cent of the insurance, ₹5,000 off on Omni, and accessories worth ₹10,000 on the Maruti-800.

This is when Maruti, along with Ford and Honda, is amongst the better-placed manufacturers, say industry experts. Every manufacturer offers some freebies or other consumer loyalty schemes. Maruti replaced subvention with freebies.

"Freebies are likely to increase in the next few weeks, as companies will have to liquidate stocks before the rains," said an industry expert, who did not wish to be identified. The trigger for doing so could be different for different manufacturers.

Hyundai, for instance, will introduce a new model for Santro in October, plans for which may also get advanced, say industry sources. It would like to liquidate its existing stock before launching the new model. Also, experts say, families go on holidays during this time of the year and prefer to spend ₹2 lakh on a holiday than a car.

"Sales are likely to slow down, and manufacturers may selectively offer subvention (take part of the interest costs). But with input costs and tax burden going up, there's not much room," said General Motors' P Balendran. "We have to see how the market behaves in the next few weeks," said a Maruti spokesman.

They also point out that though interest rates increased through out last year, the car industry posted a 20 per cent growth in volumes. But, freebies have been common for most of last year. More freebies could more than offset the increase in interest costs, opine auto experts.

Those planning to buy two-wheelers may also benefit from subvention (where a company bears a part of the interest cost), as demand is typically lower during early April. While supply has gone up as both Hero Honda and Bajaj have set up new plants, demand has tapered off from last year.

They would hope, along with consumer durable marketers like Videocon, to sell their rising stocks with the onset of the marriage season later this month. But if you are planning to buy a bike, it may be a good time to check out the prices.