MUMBAI, January 30: January has been a bad month for the mid-size car segment, going by the initial feedback from dealers. The official figures will be available only in a week's time but present indications are that the Esteem is the only car to have done well.The slowdown this month has been a cause for concern to manufacturers as the new year is the time when car sales improve significantly. Buying is also prompted by the fact that a vehicle's resale value becomes higher depending on the year of purchase.
For instance, a Maruti 800 bought in January this year qualifies as a 1998 model while one purchased last month will automatically become a 1997 model and, hence, a less attractive option in the second hand market.
Despite this obvious benefit, customers are just not biting the bait. The most obvious reason, dealers say, is that following the price cut announced by Daewoo Motors India for the Cielo, the Indian consumer is under the impression that other manufacturers are going to follow suit. "Theybelieve that if a steep cut is inevitable by March, why bother spending an extra Rs 1 lakh on a car now."
The sad truth is that none of the manufacturers is in any mood to oblige. For instance, Maruti Udyog Ltd has reiterated that the Esteem will cost the same. Likewise, officials of General Motors India told The Financial Express at the recently held Auto Expo in Delhi that the company would not compromise on any price cuts for the Astra. "The car is in the premium segment and that is where it belongs," they maintained.
Dealers also feel that the first half of January witnesses slow buying for some auspicious reasons. However, the latter half has not been any cause for cheer either, and the general feeling is that if this continues, the mid-size segment is in for hard times.
Some auto financiers believe that consumers have deferred buying for another attractive alternative - the Honda City. The car, which has already been launched in a small way, is all set to hit the Indian roads in a big wayduring the next few months. The City's biggest attraction is its price. The 1.3 litre petrol version has an on-road tag of Rs 5.8 lakhs in Delhi, making it one of the best bargains in the mid-size segment.
"Only the Esteem can compete with this price but it is still not a patch on the Honda name. According to us, this is the vehicle to watch out in 1998," dealers say. The City is expected to be a stiff competitor to the Ford Escort and Astra which are dearer. The Cielo's price has been slashed but this may not translate into bigger volumes immediately.
Dealers confirm this saying that sales of the Cielo have not increased dramatically after the cut in price was announced. The number of enquiries has been going up but it is still too early to say if the customer is sold on the product, they add.
Interestingly, some dealers maintain that corporates are not too keen on buying cars to avail themselves of depreciation benefits as was the trend earlier. With corporate tax having been reduced in the 1997-98budget, the need to look for alternative benefits has also come down.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
