The Hindu Business Line : Maruti clamps down on extra discounts

New Delhi, Aug. 31 Customers may be making merry with the cut-throat competition among dealers to offer them higher discounts, but it is certainly not making car manufacturers smile.

Maruti Udyog Ltd, for one, has penalised dealers in August for offering discounts beyond what the company permits. In a few cases, it has also suspended dispatches to dealers who are cutting their own margins to woo consumers.

“The move is only temporary and only on certain models,” said a Maruti official. As per Maruti’s policy any dealer that offers discounts beyond the stated scheme for that period is fined or its dispatches are suspended for a while.

Other companies such as Hyundai and General Motors too prefer that the discounts on their passenger car portfolio remain uniform across all showrooms within a city. However, dealers continue to offer different rates, customised financing options, and freebies to lure more buyers. This often results in a battle between consumers, dealers and the manufacturer.

Industry watchers say companies are conscious of their brand losing its sheen with varying discounts. “Any discounted product loses its brand image if it goes below a certain price point,” said Mr Rajan Pental, Senior Vice-President, Vehicle Financing, HDFC.

“Within the same city, prices generally don’t vary. But dealers structure the financing option to make it look unique for their customers,” said Mr Jnaneshwar Sen, Senior GM, Sales and Marketing, Honda Siel Cars India Ltd. General Motors too does not permit its dealers to offer varying discounts in the same city. “However, dealers justify these discounts on different grounds and it is difficult to find out when they flout company policy,” said Mr P. Balendran, Vice-President, Corporate Affairs.

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