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Old 12th June 2024, 11:26   #1
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Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

Setting the context
I was in the market for a new car for my wife, a year or so ago. We went to check out the usual place where all budget car buyers go to - Maruti Suzuki. Checked out the Alto, S-Presso and Celerio. Our priority was cheap and easy-to-drive automatic. We got the quotes for S-Presso and left home, did not pursue the plan due to various reasons. Fast forward to today, my wife's current car was starting to show its age (Nano XTA -2016) and a recent service warned me about upcoming costs. So, we were back in the market and asked for a quote for the S-Presso - same model.

The quote I got this time was different to the price I had in mind. Pleasant surprise - the price of the car has gone down by some 60k. At first I thought the quote was of non-AGS model car, which was not the case. As far as I remember, the quote a year ago was around 7.2 L on-road for VXI+ AGS. Now it was down to 6.55 L. I think there was a reduction in base car price (unsure)- on-road was showing around 7.05L and a 50k discount was applied on the on-road price.

Source 1 for the thought - What caused Maruti Suzuki to reduce the prices, that too by approximately 60k for a 7L car?

There have been several threads lately about discounts being available on new cars. Another incident happened last day - My brother had booked a Tour M (Ertiga taxi version) some time ago and was told that there would be a 6-7 months wait time. He changed his decision and changed the booking to Ertiga recently (moved from Tour M), not choosing a colour. He got a call from the dealer this week saying that there is ready delivery stock available. The dealer even told me that there were a few 2023 December make Ertigas available!

Source 2 for the thought - How can there be unsold cars from 2023 for a car which has a long wait period? Maybe it was badly planned by the dealer, but, how can a 2024 make Ertiga available fast despite the change in booking?

Source 3 for the thought - Other indicators:
1. Sense a bit of "not so good" performance from our line of business at work. I don't worry too much about it, as ups and downs are common during the year - or is it?
2. A week ago, I was contacted by a recruiter offering me a position in another company. When speaking about salary, I said I expected industry-standard hike of 30 - 40% (considering relocation) – to which he said that there were some instructions given to him that the hike could be only somewhere in the 20% range. Though this is usual, I was a bit taken aback since the level at which they were hiring is one level above my current designation, and the role is in a metro city compared to mine which is a tier 3 city. The hiring market (at least for my role) is not so promising these days.
3. One of our family friends was speaking to my parents who were saying that they were unable to find takers for a couple of their land/ building properties. I take that with a pinch of salt, though – they would have expected an unreasonable sale value. Or is it that the real estate market does not have enough buyers?
4. I have been hearing companies having plans to reduce work force and resorting to lay-offs to reduce costs.

It could be that demand for new cars have now stabilized after COVID spree. Everyone who wants/ needs a car would have had it by now, and will be comfortable for the next few years - this would have reduced current demand for cars, leading to discounts and offers.

OR

We all know that there are slowdowns reported in other countries, whereas India has always shown positive signs. Though this might be true, the current discounts read alongside the points mentioned in "other indicators", is there an upcoming slowdown in growth (may not be so bad that there is degrowth, but a reduced pace)?

What do you all think of the recent discounts and macro-economic situation? Is it a demand stabilization phase for the automotive sector or is a slowdown coming up. Can we have views?

Last edited by Aditya : 13th June 2024 at 06:21.
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Old 13th June 2024, 06:22   #2
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re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

Thread moved out from the Assembly Line. Thanks for sharing!
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Old 13th June 2024, 07:01   #3
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re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

All the points you have raised are valid to an extent. The boom period post Covid is over, the pent up demand has been exhausted, and the macro economic situation is what it is. Fact is that the auto industry is sitting on massive amounts of unsold inventory. These people have overplayed the waiting period nonsense and indiscriminately raised car prices over the past three years, which is now coming back to bite them. I see price reductions and corrections happening across the board. It’s a buyer’s market again.

Last edited by Shreyans_Jain : 13th June 2024 at 07:02.
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Old 13th June 2024, 07:03   #4
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re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

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Originally Posted by Sk8r View Post
There seems to be a trend among major OEMs to launch VFM variants. Am sure this has to do with inventory pile-up or slowing demand. Tata did it with Nexon, Mahindra is continuing to do it with XUV 7OO (MX Auto variant) is on the cards.

Overall, good times for the consumer!
Along with discounts, there are a lineup of "VFM" variants being launched from various OEMs. Cross posting from another thread.

On your point regarding inventory, I think it's a real problem. This news article throws some light, although few bits might be exaggerated : Car dealers may end up with INR 44000 crore worth of inventory

Regarding your indicators, on

Point #2 : Absolutely, the Covid era craze of 40-60% hikes are gone and recruiters(&we) are back to our senses. Not before causing a slew of domino effect damages to inflation across all segments, thanks to US printing money like no one is watching.

Point #3 : If there is one industry milking the middle class - it's real estate. The banks(with easy loans) + mighty real estate companies + black money has inflated property prices c-r-a-z-i-l-y. It's almost beyond middle class reach unless we're slaves to the bank for the next 20 years.

Point #4 : This keeps happening and not a surprise, more so with listed companies and their blood quenching thirst for margins to satisfy shareholders.
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Old 13th June 2024, 09:25   #5
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re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

You should check the used car market for a reality check. I see cars still selling for obscenely high prices. For example, a 2017 Swift sold for 4.5L. I think it has something to do with the particular model that you chose.
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Old 13th June 2024, 09:37   #6
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re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

It’s all about the options - so many models out there to choose from. The only time manufacturers can set high price is when they are launching a new car, which happens every year now.

There has been a massive shift in the technology and the consumer behaviour. Demand is always high for a new product because it’s latest with all the bells and whistles. Same product is deemed to be outdated after a year. There’s a segment of consumer who always wants to buy latest even at a premium.

Hence, what to do with the old inventory? Give a discount. There’s still a large market who don’t care about products being latest and are happy to get a little old inventory at lesser price.
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Old 13th June 2024, 09:42   #7
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re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

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Originally Posted by wheelspinner View Post
You should check the used car market for a reality check. I see cars still selling for obscenely high prices. For example, a 2017 Swift sold for 4.5L. I think it has something to do with the particular model that you chose.
To be honest, i actually see websites like Spinny marking down the prices for existing inventory. They basically put a price down tag on those cars and that moniker has been showing more often on the website at least for the Bengaluru location.

Now, I do agree that used car prices are still insane but I am hoping that a combination of exhausted pent-up demand and better equipped lower variants of new car models will actually cool down the market.

I mean why would I purchase a used 3 to 4 year old XUV 300 W8 AMT petrol for somewhere around 11L to 12L rupees when I can get a brand spanking new 3XO MX2 pro AT for Rs. 12L on-road with 6 standard airbags and a torque converter. The features I loose are not actually must haves.
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Old 13th June 2024, 10:20   #8
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re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

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Originally Posted by NotanF1driver View Post

Source 3 for the thought - Other indicators:

3. One of our family friends was speaking to my parents who were saying that they were unable to find takers for a couple of their land/ building properties. I take that with a pinch of salt, though they would have expected an unreasonable sale value. Or is it that the real estate market does not have enough buyers?

Can we have views?
This is specific to kerala, assuming from your given location, my relatives told me about a rich guy who's dropped his plans to acquire commercial real estate. The cost of registration/red tape is nearly 50% over the property cost. The same red tape is preventing him from operating his primary business at full capacity. The problem is self inflicted, in Kerala at least.

The stock market is more liquid and the local goons can't grab your demat shares,that's where the money is going.
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Old 13th June 2024, 11:46   #9
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Re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

I was in the market for a small, reliable automatic car that did not compromise much on the safety front. Considering the stable shell structure of the Honda Amaze, I went to a couple of dealers to get their quotes. It turned out that while the OTR price is about 11.2L for the VX CVT in Odisha, I got mine for about 10.2 with the showroom insurance, car cover, basic kit and the seat covers thrown in! The dealer had one in stock for the last 3-4 months because of a large lot having arrived from Honda. I think I agree with what the fact that larger inventory pool-ups are causing this.

Also, I think discounts on Mahindras are going to be underway since a friend of mine who interned there said that there were a huge lot of cars just simply sitting there waiting for the chips to be installed. With shortage now well in control (PS5 being back in stock is a benchmark case), I think this should just about clear up the queue.
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Old 13th June 2024, 11:52   #10
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Re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

I guess Maruti recently launched a Dream series edition for Alto, Spresso, and Celerio. This is nothing but added features to the existing line of variants without extra costs. Since the purchasing power of the middle class is better and everyone wants a feature-rich car, there are few takers for these entry-level segment cars now.
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Old 13th June 2024, 12:18   #11
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Re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

IMHO, all auto companies have indulged in the shady tactics of insane waiting periods, which were very obvious gimmicks! Considering that the demand for cars which shot up during the COVID phase has now stabilised, the demand for new cars has now evidently slowed down. A major portion of the working population who has bought new years will not buy new ones atleast for 3-5 years, in an ideal scenario. Been hearing from all quarters that auto companies are sitting on heavy unsold inventories, across the board. Ultimately, the dealers will have limited holding capacity and would look at all avenues to offload 2023-make models immediately.
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Old 13th June 2024, 14:11   #12
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Re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

One recent trend which I can see since past couple of years is the shift in consumer behaviour which is affecting the whole automobile industry.

Like there has been an increase in demand of used cars. In a recent interview with the Economic Times, CARS24 Co-founder and CEO Vikram Chopra, on March 3rd, 2024, said “ According to our internal study, the anticipated growth of the Indian used car market is set to occur at a 15 per cent CAGR, increasing from USD 25 billion in 2023 to USD 100 billion by 2034”.

A good part of this 15%, could have been new car buyers, who have opted for used cars instead of new cars.

We are all aware of the benefits we avail when buying a used car like monetary benefit (significantly reduced price). Add to that one more point.
Previous generations used to take pride in holding on to cars for longer duration and feel appreciated when complimented on maintaining it. They had an emotional bond with their cars.

A lot of people in generation Z think of cars as disposable assets and don’t feel emotionally connected. It’s more like they use it as a means of communication from A to B.

Therefore, new features and new technology play an important role.

My father for example owns a perfectly fine diesel vehicle and wants to now sell it only because it’s a diesel.

A couple of my friends, including my wife, now want an EV just to reduce their petrol bills.

A friend of mine solely upgraded to a new car because his family wanted a car with “a big sunroof”.

So if there is a so called “outdated model”, like Maruti S-Presso, the prices will be reduced to clear the stocks and inventory.

We ourselves come across newly launched cars, which seem outdated, even at launch. The manufacturer, has to give significant discount on these, but that doesn’t necessarily mean that the whole industry is reducing prices. It’s actually a price correction for that model.

These patterns keep affecting the demand and supply in the auto industry.

Last edited by adityaNview : 13th June 2024 at 14:13.
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Old 13th June 2024, 18:06   #13
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Re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

Ofcourse, this is a buyers market right now.

I am in the market to replace my 2017 Tigor XZA.

Here is my ground report on discounts available on various cars/models based on my interaction with salesmen:

1. Hyundai has discounts on once sought after Verna too. Remember the hype the new Verna created and insane waiting periods ? Gone are the days. You now get immediate delivery, your choice of color, and discounts to the tune of 20-30k +exchange bonus, even on the DCT !

2. Elevate and Honda city has discounts to the tune of 30/40k cash discounts + exchange bonus. 2023 stock has more discounts, depends on bargaining skills.

3. Skoda has massive discounts of upto 2.5 lacs on 2023 stock Slavia/Kushaq, which includes also extended warranty upto 6 years and 2 years maintanance package. Ditto with VW.

4. Maruti has discounts to the tune of 60k on the Grand Vitara, FronX, Ertiga, XL6.



The biggest indication is that now car dealers are not acting as demi-Gods. Now, they chase you, instead of you chasing them. They call you back, arrange home test drives on demand, do multiple follow calls to negotiate further on prices.

This is what Car market was really all about, pre-2020.

The only car company whose car dealers act as "Buy it, or get out of our showroom fast" are the Mahindra and Mahindra dealers. Even today they boast of extended waiting periods, due to limited production capacity and pent up demand. But guess what ? They are now feeling the heat and introducing newer variants (a.la XUV 700 AX5 S etc.) and even offering minor discounts.



Good days are finally back again
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Old 13th June 2024, 19:46   #14
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Re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

One important and unfortunate factor is that we still have to pay the full tax (which on >4m cars can be as high as 75-80%) with dealer discounts as they’re not considered for tax calculations.

I hope manufacturers reduce the price officially for lower selling models which will lead to double savings for the customer as the (insane) taxes will reduce too. Alternatively they have to reduce the price by a lower amount to still end up having a much bigger discount on the on-road price.
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Old 13th June 2024, 22:38   #15
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Re: Car discounts coming back in 2024 | Is this to do with the macro-economic situation in India?

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Originally Posted by NotanF1driver View Post
[b]Source 3 for the thought -
2. A week ago, I was contacted by a recruiter offering me a position in another company. When speaking about salary, I said I expected industry-standard hike of 30 - 40% (considering relocation) to which he said that there were some instructions given to him that the hike could be only somewhere in the 20% range. Though this is usual, I was a bit taken aback since the level at which they were hiring is one level above my current designation, and the role is in a metro city compared to mine which is a tier 3 city. The hiring market (at least for my role) is not so promising these days.
I can relate to this point specifically as market for IT jobs has been in a downtrend for last 2 years after the boom which we witnessed in COVID. There have been absolutely no hikes for service based companies, which has resulted in considerably less disposable income in hand of youngsters who I believe are one of the biggest spenders in automotive sector. Also, there is a fear looming for Layoffs in the IT industry. I was eagerly waiting for new Skoda Superb launch and was planning to get it however looking at the job market conditions, I'll have to make do with my current cars only!
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