The nation-wide lockdown due to COVID-19 dropped like a bomb on the two-wheeler industry that was already grappling with plummeting sales. However, after three phases of lockdown, operations have gradually started resuming. But with the sales at an all-time low, OEMs will be adapting certain ways to bring it back on track.
Now, most of the prospective customers are aware of this situation and they might approach dealers with a hope of receiving attractive deals on their purchase. While these deals will come in the form of lucrative finance schemes and freebies, we believe cash discounts won’t be a part of it for more reasons than one.
Higher profits top-priority for brands
With the onset of new safety and emission regulations, the prices of two-wheelers have gone up considerably over the past few months. This has resulted in low buying sentiment of customers, leading to consistently declining sales. Amidst this, the nationwide lockdown completely halted the sales for a while, resulting in a grave loss for the brands.
Now, recovering from this predicament will take a few months which also depends on the state of lockdown. During this period, instead of giving cashing discounts, most companies will be more focused on higher profits which can be gauged by the consistently increasing prices of two-wheelers since the commencement of ‘Unlock 1.’
Discounts can’t be expected from the dealer’s side either. Owing to the disrupted supply from component providers located in red zones and limited workforce at the manufacturing facilities, the production has taken a toll for most bike makers. That ultimately means stockyards of a majority of dealers won’t be as stuffed as usual, and there will be lesser pressure to speed up retail.
Attractive finance schemes – Beneficial for brands and customers both
Although giving cash discounts won’t be feasible for the brands, they’ll still need to make the purchase lucrative for the customers for improving sales. This is where attractive finance schemes, tailor-made for different customers, come into picture.
Owing to the financial insecurities induced by the economic slowdown, most of the customers will want the ownership of their two-wheelers to be less burdening. Here, a finance scheme with a longer tenure or lower interest rates or a combination of both will bring a huge respite for the buyers.
TVS’ new ‘Buy now pay after six months’ scheme rolled out for the XL100 is a good example of this. It allows one to buy the moped by financing 75 per cent of its on-road price and get moratorium of six months before the start of monthly EMI. Most of the manufacturers have already started collaborating with finance companies for rolling out such enticing loan offers.
Freebies will add an icing to the deal
Benefits will also come in the form of freebies. As festive season inches closer, the brands will want to cash in on the increased buying sentiment and free accessories is one way to do that. Why we say this is because the percentage margin dealers have on the accessories is extremely high which gives them a room to compromise there. Extended warranties and multiple free services could be added to the string of benefits from the dealers.