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India's Maruti lures buyers with sweet deals and strict hygiene

Top automaker offers new finance plans with an eye on post-pandemic market

A Maruti showroom staff member sanitizes a new car before handing it over to the buyer. The automaker introduced strict hygiene standards at its dealers and workshops. (Photo courtesy of Maruti)

NEW DELHI -- India's largest automaker, Maruti Suzuki India, is rolling out a series of new sales strategies to counter the damage caused by the coronavirus pandemic. Although the sales are recovering at a snail's pace, the company has been quick to set a new normal for India's auto industry, poised to keep its edge in the upcoming competition.

Things have been limping back to normal since the company reopened its operations in a staggered manner with its production at its three plants in Gurgaon and Manesar near New Delhi and in the western state of Gujarat, starting in May. Maruti posted total domestic sales of 13,865 units in May, down 89% from a year earlier.

Maruti is tackling the coronavirus slowdown with new loan options, including a "buy now, pay later" deal and other financial plans that allow customers to pay more flexibly. The company has also moved swiftly to establish hygiene and safety standards for luring back customers.

Maruti announced on June 9 that it would introduce a new car financing plan with Mahindra Finance, a nonbank financial company with 1,450 branches across India. Both companies will allow customers to choose the option of a two-month moratorium on loan payments to help them manage their cash flows.

"We are extremely confident that this alliance with one of India's largest NBFCs will help in increasing easy finance availability to our customers in the current challenging situation arisen due to COVID-19 pandemic," Maruti Executive Director Shashank Srivastava said in a statement.

The partnership with Mahindra Finance is the latest move by the automaker to boost car sales after forging a series of tie-ups with another major nonbank company Cholamandalam Investment and Finance, major private banks ICICI Bank and HDFC Bank. Following Mahindra Finance, Maruti also announced an auto loan partnership with Indusind Bank and Karur Vysya Bank.

"The road ahead for Indian car companies has a major speed bump -- a demand shock coming with pay cuts and job losses galore," auto analyst Tutu Dhawan told the Nikkei Asian Review. Maruti needs to "get their inventory moving and a combination of new models, financial incentive and more marketing spend will spur the near term sales strategy," he said.

The coronavirus, which has so far infected more than 350,000 people and killed nearly 12,000 in India, has dealt a major blow to Maruti, which has in recent years maintained a 40% share in India's auto market, the world's fifth-largest in terms of sales volume in 2019.

The impact of the lockdown on sales was absolute, as during that period for the first time in its history, the company dispatched zero cars to its dealers in April.

India is already the fourth-most affected country in the world, behind the U.S., Brazil and Russia, with the virus showing no signs of slowing. The government has begun easing the nationwide lockdown, but it will likely take time for auto sales to normalize, forcing automakers to restart operations despite the ongoing contagion.

Prior to the financial promotion, Maruti announced stricter hygiene controls at its over 3,000 showrooms and workshops. Dealerships will carry out complete sterilizations of test-drive cars before lending them to customers to ensure maximum safety. The company now offers doorstep delivery of cars by staff, who wear face masks and carry sanitizers.

Instead of shaking hands, Maruti showrooms now encourage staff and customers to greet each other with a local form of exchange, which does not involve contact. (Photo courtesy of Maruti)

At workshops across the country, the health of over 80,000 staff will be monitored through a dedicated app to reduce the risk of transmitting the virus to customers.

"I would like to assure our customers that your car buying experience with Maruti Suzuki is completely safe," Maruti managing director and CEO Kenichi Ayukawa said in a statement. The company delivers cars "in a completely safe and hygienic environment," he added.

In addition to these measures, Maruti earlier this month launched a health and hygiene range of car accessories to meet the customer demand for safety, hygiene and sanitization. The nine items include masks, goggles, shoe covers, gloves and face shields. Car cabin partitions, made of transparent polyvinyl chloride material, that divides the front and rear space of the car was also launched.

"We expect demand picking up on the back of robust supply chain and innovative financial offerings," said John Paul, owner of Maruti dealership Popular Vehicles and Services in the southwestern state of Kerala. "The trend toward greater personal ownership of cars is accelerating since the viral outbreak."

Maruti launched a range of health and hygiene accessories, including partitions for vehicle interiors. (Screenshot from Maruti website )

The competitors are also rolling out new sales strategies for a post-pandemic world.

South Korea's Hyundai Motor, the second-largest brand in India, has resumed operations at its Chennai plant in May and introduced the Hyundai EMI Assurance program, in which the company will pay up to three monthly installments to customers who lost their jobs in the private sector.

The program will "give new Hyundai owners working in private organizations full peace of mind during these times and create positive and confident sentiments for Hyundai car purchase," Tarun Garg, director at Hyundai Motor India, said in a statement.

Local auto major Tata Motors has launched a dedicated online car sales platform called 'Click to Drive,' which is integrated with all Tata Motor dealers from more than 750 outlets in India. It offers an app-based option for choosing a car, and promises home delivery.

"This year is difficult for the auto industry. We expect the Indian market to post approximately 35% decline in 2020," said Gaurav Vangaal, associate director, forecasting, at IHS Markit. Competition for car sales in the post-pandemic era has already begun.

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