Maruti, Hyundai bet on first-time car buyers with easy financing schemes

Going all out to attract first time buyers during the pandemic, auto firms are working to change the way cars can be bought or sold
Atul, a young executive, had planned to buy his first car in March. He had zoomed in on a couple of models in the below Rs 10-lakh segment. Then came the virus followed by a pay cut, and now he’s thinking of deferring the car plan.

 
As automakers resume production after the longest closure, they will depend on customers like Atul for a revival.

 
Going all out to attract first-time buyers during the pandemic, automakers are firming up plans to offer tailor-made finance schemes with a much lower down-payment option for entry-level models. Digital shopping and doorstep delivery would also be crucial for buying cars at a time when social distancing will be at the centre of all activities.

 
For instance, on the back of the popularity of entry-level cars like Alto, Kwid, Celerio, Santro, WagonR, Tiago and a few others, segment leader Maruti Suzuki is working on a new strategy to woo first-time buyers.

 
Company executives agree that the sentiment of first-time buyers, constituting 47 per cent of the total, will be the biggest factor in revival. Pointing out that almost 80 per cent of such buyers avail some kind of financing, Shashank Srivastava, ED, marketing and sales, Maruti Suzuki, said the company was in talks to design schemes that would significantly reduce the down-payment amount.

Also, Hyundai has launched a car financing scheme for customers hit by the crisis. The scheme offers a potential car owner cover against three EMIs if the customer has lost employment or is in poor financial health. Even if the company that the customer is working for is in the process of a merger or acquisition, a special financing scheme will be available.

 
Hyundai's scheme is similar to what sister concern Kia is doing. It’s offering unemployment insurance scheme in several European markets. It also allows customers to delay monthly payment on the vehicle on loss of employment.

 
“We understand the needs of our customers. Such schemes, during these times will create positive and confident sentiments for our customers,” said Tarun Garg, director – sales, marketing & service, Hyundai.

There’s reason why India’s top two carmakers are betting on first-time buyers. The trend in Chinese auto market shows people are tilted towards buying cars to ensure distancing.

“There is a good reason to believe that people who were availing shared mobility because of affordability will now avoid public transport and therefore look to buy a car. But it is important to keep in mind that affordability will play a big factor,” said Vikas Jain, assistant vice president, unit sales head, Hyundai India.

 
Analysts say the impact of the virus, on commercial and premium vehicles, will last longer than the lockdown period. “Categories such as economy, entry-level cars, tyres, and batteries, should experience a revival in second half of FY21,” said analysts at Dolat Capital.

 
Maruti Suzuki, which has reopened 600 out of its 3,100 dealerships, in a survey found out that customers are mostly worried to go to the outlet and buy cars. The firm is encouraging its digital platform. “There are around 28 touch points a customer goes through in a showroom. We are trying to eliminate all. Just like network strength, the digital share of a company will also be important,” said Srivastava.

 
The auto industry in India has already undergone considerable slowdown over the past 12-18 months due to structural changes beginning with goods and services tax, shift to shared mobility, axle-load reforms, the BS-IV to BS-VI transition and liquidity crunch. According to Deloitte, industry is likely to witness a prolonged U-shape recovery, with a best-case recovery in sales volumes expected by FY22.


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