[agambhandari]

Originally Posted by pganapathy

I have to wonder if this deal is being offered because the dealer and/or Skoda

If this is a dealer offer in Gujarat only, what happens if the dealer goes bankrupt or shuts shop

+1 to this I would also like the answer to this. After all these are the dreaded Skoda dealers!!

[DWind]

Is there any rider that the buyer has to keep the Rapid for 5 full years to avail the Freebie? If yes, then the dealer would already make sure that he gets the price of Fabia in the five years. Not to forget upfront saving in not giving the Rapid any discount. So anybody who might not end up with Skoda at all in the first place will be left to tend to 2 Skoda after five years. Win-Win situation for the dealer and the company

[S.MJet]

To me this looks purely a marketing gimmick to create excitement & increase footfall.
Dealer would finally be offering the current 1 lac cash discount.

The offer as such does not make any sense.

OT
I wish some builder come out with such offer. Buy 3 BHK & get 2 BHK free five years from now.

[swarnava.m]

Originally Posted by GTO

...If you'd rather have cash, Torque Auto will pay you Rs. 350,000 in the year 2018...

An article on Motorbeam states the same. Link HERE.

I see a catch here. In 2018, the Fabia might be an old and outdated model if not refreshed (which, being a market dud, it probably won't be). Hence most people would not want it, in which case Torque Auto pays you 3.5L. However, Fabia will most probably cost much higher than that by then, and 3.5L won't have the same value that it has today.

GTO, and the Motorbeam article, both state that the dealership will pay you 3.5L and not the existing price of Fabia then. The 3.5L they will shell out then might not be very different from the 1L discount (in terms of financial weight) being offered on Rapid today. Maybe slightly more, but much lesser compared to the interests on the extra 1L in 5 years.

Hence, in my opinion, this amounts to nothing more than the same discount to Skoda, only at a much later point of time, and yet probably some extra sales numbers at present.

A marketing gimmick, nothing more.

[tbppjpr]

Originally Posted by S.MJet

The offer as such does not make any sense.

Originally Posted by swarnava.m

A marketing gimmick, nothing more.

You guys mean Rs 3.5 lakh hold no value? IMO Whatever little amount that 3.5 lakh maybe that time but still that little amount is better than nothing?

We all know the dealers and companies are in the market to do business and to earn money so obviously they won't be giving anything at free of cost and same is in this case. Still this dealer is atleast promising to give some benefit in future. If that 3.5 lakh doesn't look 'anything' than should people buy the Rapid without opting for this offer?

According to TBhp review of Rapid, it's a powerful car, great handler, well built, has quality fit and finish interiors. It offers nice ride quality with high speed stability. And now this offer is like "Sone Pe Suhaaga", I even wish Skoda runs this offer all over India but I think you guys caught something different in the offer which me and few other fellows might be missing here. If you are saying its just marketing gimmick, nothing more than there must be some reason behind that. Please throw some more insight on that, maybe some buyers are reading this thread who maybe thinking to go for this offer and your finding may turn out as eye opener for them.

For example if I would have been in market for a car with budget of around 10-12 lakh rupees, than there would have been some cars in my mind including Rapid, Vento and Verna. And if suddenly such offer comes, than chances are more that I go for Rapid with this offer.

[junaid12345678]

Skoda cars are fantastic but its just confined with the cars itself. The overall ownership experience of a Skoda vehicle had never been a good thing to remember, regardless of the model of the car, be it the Rapid or Fabia. But this offer is surely going to do atleast a part-time job for the Skoda India. If there are no hidden surprises then after 5 years you are going to get another car, that too the base variant Fabia, one of the best hatch with fantastic dynamic abilities. If you use the rapid for 5 years, you get the Fabia. So another 5 years for the Fabia. This way Skoda India ensures that you will be owning and maintaining a Skoda car for the coming 10 years, a steady source of income for a horribly customer centric Skoda. This offer serves two purposes; you can enjoy the pleasure of driving a Skoda and Skoda India can sit back and relax while you pays.

[amitoj]

LOL. Isnt it obvious? They are so sure that whoever buys a Rapid now will end up paying enough in repair and maintenance for the car over next 5 years that it will enable Skoda to give him another car and still make a profit!
PS: I am just joking. No offense intended for any current or future or past satisfied Skoda owners.

[S.MJet]

Originally Posted by tbppjpr

For example if I would have been in market for a car with budget of around 10-12 lakh rupees, than there would have been some cars in my mind including Rapid, Vento and Verna. And if suddenly such offer comes, than chances are more that I go for Rapid with this offer.

Exactly my point. Offer is to create interest & make people to look at Rapid seriously.
Rapid itself is a fantastic car & with this gimmick chances increases many folds for prospective buyers to fall for it.
The final deal more likely will be upfront cash discount than a Fabia 5 years down the line.
I am sure Rapid is available without this offer (with regular cash discounts/offers)

Whatever be the logic behind this offer, it's an innovative marketing gimmick.

[2cents]

If this 3.5L in 5 years is true, I think it makes for fantastic investment. You pay one Lakh extra on a Rapid (in lieu of discounts) and get 3.5Lakh in 2018 - that's a 250% growth in 5 years. No MF, gold, or even realestate can guarantee that kind of return. Seems like Skoda sure got some fine fund managers. In fact, any one going for the deal should ask them if you can pay 1 lakh more now and get 7Lakh in 2018!!

[Arch-Angel]

My oh my, first time promo of a car being given free for another. I guess people who do buy the rapid will opt for cash after 5 years. Reason? Rising costs of Skoda spare parts and their unreliable A.S.S.

I am imagining this would be great! Assuming the terms and conditions doesn't state that the owner should own the rapid for the 5 year tenure, he can buy it and sell it off for near showroom price. Buy another, sell it off. Repeat this n number of times => 3.5L after 5 years = $$$.

[Mad Max]

Maybe, they meant Fabio? j/k...

Same thought as GTO's crossed my mind. If they are going to give a 2018 Fabia, this is a superb offer. Who knows what cars are going to cost by that time, given the likes of our FM trying to squeeze this industry. But, my thought is that somewhere they have a HUGE surplus of Fabias sitting and rotting in a yard and they just want to get rid of them. Think about even the warranty period service charges. That should still make some profit than the scrap yard.

[diffsoft]

Folks - while we may debate whether it's an old Fabia or new and so forth, my ever skeptical mind on goodies started thinking of tax implications.

Just note that if the invoice does not include this Fabia (which it is unlikely to) then it will be treated as gift in your hands, and liable to tax (as the value will be more than 50,000). That will be taxed at 30++% at current rates and may require you to fork an amount upwards of Rs 2 lakhs.

So please take note and counter views welcome.

Cheers,

[Nilesh5417]

Originally Posted by swarnava.m

An article on Motorbeam states the same. Link HERE.

I see a catch here. In 2018, the Fabia might be an old and outdated model if not refreshed (which, being a market dud, it probably won't be). Hence most people would not want it, in which case Torque Auto pays you 3.5L. However, Fabia will most probably cost much higher than that by then, and 3.5L won't have the same value that it has today.

Lets not assume that Fabia isn't going to be refreshed and won't be around etc. Also, why would people not want it? If one is already buying a skoda product (Rapid), i would assume he isn't baised against Skoda. So why not to get a car, if not free, at a much lesser price?

Lets assume it is, read through the fine print and then work out the maths.

Just note that if the invoice does not include this Fabia (which it is unlikely to) then it will be treated as gift in your hands, and liable to tax (as the value will be more than 50,000). That will be taxed at 30++% at current rates and may require you to fork an amount upwards of Rs 2 lakhs.

So please take note and counter views welcome.

That is a valid point. So its not as simple as it looks like always. Even if we do take the 3.5L and not the car, this logic would still apply right? Fine print, only if someone would get all the details.

[dipen]

Originally Posted by diffsoft

Just note that if the invoice does not include this Fabia (which it is unlikely to) then it will be treated as gift in your hands, and liable to tax (as the value will be more than 50,000). That will be taxed at 30++% at current rates and may require you to fork an amount upwards of Rs 2 lakhs.

So please take note and counter views welcome.

Cheers,

Originally Posted by Nilesh5417

That is a valid point. So its not as simple as it looks like always. Even if we do take the 3.5L and not the car, this logic would still apply right? Fine print, only if someone would get all the details.

I dont think that would be the case. If you buy a Infosys stock at 2900 at CMP and two years later when you get a bonus, the cost for bonus shares is 0 (zero investment). Short term or long term gain tax would surely apply when you see the bonus stock. Initially bought stock cost price will remain same and its loss/profit will be considered on originally bought price and then selling rate.

Similarly, when the Fabia is given to you after 5 years, you will still pay road tax, registration, insurance, octroi - the sum of all of which is your cost price which would be roughly a littleless than a lakh which would be your cost price. Now when you sell your Fabia post 4-5 years (9-10 years from now), you would get roughly 1.5 lakhs, So you pay tax on profit of about 50000 from sell of asset, which is very small.

Assuming, you decide to take the cash back of 350000 over a new Fabia car, you should consider this as return of small principal amount of the asset (Rapid bought) and show the depreciated asset value of Rapid in you books at around 5 lakhs. A dont think tax would apply here. OR

if the above is complex, assume you invest 11 lakhs for the Rapid top end, after 5 years, sell the car for around 5 lakhs, take 3.5 lakhs from the dealer. So your net effective sell price is 8.5 lakhs. So in your books, you bought an asset at 11 lakhs. After 5 years it depreciated to 8.5 lakhs and liquidated your asset value. So no tax.

If the offer is genuine with no T&C other than mentioned in the thread, there is no maths that should stop anyone (looking to buy any car from 5 lakh to 11 lakh segment) from availing the offer.

[diffsoft]

Originally Posted by dipen

I dont think that would be the case. If you buy a Infosys stock at 2900 at CMP and two years later when you get a bonus, the cost is 0 (zero investment). Short term or long term gain tax would surely apply when you see the stock.

The above example you quote is specific to issue of Bonus shares when you buy a stock; the substance of the transaction in this case is a "gift" and I quote the definition here:

‘Gift’ means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money’s worth.

Thus when you possess the Fabia, the value will be treated as "Gift" and treated thus as Income under Section 56 (2) - http://www.taxmann.com/TaxmannFlashe...t13-1-11_5.htm

Originally Posted by dipen

Assuming, you decide to take the cash back of 350000 over a new Fabia car, you should consider this as return of small principal amount of the asset (Rapid bought) and show the depreciated asset value of Rapid in you books at around 5 lakhs. A dont think tax would apply here.

Not quite. Because the value of the Rapid will be the value as mentioned in the RC book / Smartcard which will reflect the invoice value and not the "nett value". Thus this cash back (in whatever form) will be a gift as per definition above.

Originally Posted by dipen

if the above is complex, assume you invest 11 lakhs for the Rapid top end, after 5 years, sell the car for around 5 lakhs, take 3.5 lakhs from the dealer. So your net effective sell price is 8.5 lakhs. So in your books, you bought an asset at 11 lakhs. After 5 years it depreciated to 8.5 lakhs and liquidated your asset value. So no tax.

We have to apply tax laws appropriately. You may "invest" 11 lakhs in Rapid, but the book value will still be only Invoice value ++. Depreciation will have to be as per Income Tax Act and the difference between Sale Value when you do and the Book Value will be treated as Capital Gains (infact a hard core AO will take it as business income because he will say that you bought it with the intent of selling, so it's in the nature of business). I do not know the depreciation rates for passenger vehicles (some block rate) but to say no tax is incorrect.

Cheers,