NEW DELHI, July 19: If you want to buy a car, a scooter, a washing machine, a television, or any consumer durable for that matter, this is clearly the best time to do it. For the ongoing slump in the market has forced almost all manufacturers to come up with some finance scheme or the other. What's more, as compared to their predecessors, the schemes are a lot more attractive, and offer genuine benefits to consumers. Manufacturers, in fact, are shouldering a hefty portion of the discount being offered to customers.

Take Daewoo's offer for its Cielos, for instance. Around February, the company found it could just sell around 700-800 cars a month. So in March, it introduced a scheme whereby buyers could get financing for the car at an interest rate of just under 15 per cent at this time, the prevailing interest for car-finance schemes was around 24 per cent. In March, the company found sales jump to around 1,400 while sales typically increase in March as customers want to avail of depreciation benefits, company sources claim that the scheme helped boost sales by around 40 per cent.

When the scheme came to an end in April, the company found that May figures fell to around 800 again. It has now come up with a month-long scheme which allows consumers to avail of a one-year finance scheme in which no interest will be charged. Nor will the customer be charged the usual processing fee of Rs 8,000 that most companies charge. According to Daewoo, the customer saves a total of Rs 67,280 if he avails of this scheme (as opposed to a normal scheme).

What is the cost of this largesse, and who bears it? A lot obviously depends on the cost at which the company can raise funds Daewoo, for instance, can probably get funds at a cheaper rate and may even be able to source overseas funds. In which case, it is clear that the consumer's saving and the cost to the company are not the same thing. While Daewoo obviously refuses to comment on the matter, finance company sources reveal that typically the manufacturing company bears 50 per cent of the cost, the dealer and the finance company split the rest. For its current zero-interest scheme, Daewoo has tied up with six finance companies.

Following Daewoo's scheme and the response to it, Maruti Esteem is now being offered on similar terms through Countrywide Finance. The response of the scheme, which began in June, according to dealers is excellent.

Recently, Bank of America has extended an interest free scheme on Esteem, according to which there will be no interest charged upto Rs 3 lakh for the period of one year, while for the balance amount 15 per cent interest will be charged.

Partly as a result of such schemes, the mid-size car market has managed to grow at just under 10 per cent in the first quarter of the year as against a poor growth last year. What also makes the schemes different from the earlier ones is that the earlier schemes concentrated on dealer incentives -- gold chains, return tickets to the Maldives etc. The dealers, in turn, passed on some of these to customers. A similar trend is also seen in the two-wheeler segment. Last year, Bajaj Auto came up with a 12 per cent rate of interest scheme through its finance arm Bajaj Finance this has now been reduced to 9 per cent. Similar discounts are also being increasingly offered in the consumer electronics segment. Videocon is offering a zero-interest scheme for one year for one of its washing machine models as well as its one-and-a-half tonne airconditioner.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.