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Maruti Suzuki To Review Its Strategy Of Discounts Offered On Products

Maruti Suzuki is looking to reduce its discount spent after its profits went down by 17 per cent in the third quarter of FY2019.

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Maruti Suzuki Chairman- R C Bhargava feels discounting is not the right way to sell cars.

India's largest carmaker- Maruti Suzuki is re-evaluating its discounting strategy as its net profit slumped by 17 per cent in the third quarter, a decline of 0.01 per cent in its sales in the same period compared to last year. It's likely that the heavy discounts offered by the company have taken a toll on its earnings, forcing it to look at reducing the discounts it offers across its product portfolio. Moreover, the company also believes that offering discounts is not a good practice to sell cars as customers' expectations increase and they demand discounts throughout the year.

Also Read: Maruti Suzuki Aims To Export 25 Per cent Of Its Annual Production Volume

Speaking to the media, R.C. Bhargava, Chairman- Maruti Suzuki India Limited said, "The policy of discounting requires a re-look. It is not a good way to sell cars by giving high discounts. Once you start offering high-discounts, customers' behaviour changes and they expect discounts round the year. We need to bring discounts down."

Sales during the third quarter weren't galloping as it usually does for Maruti Suzuki and that was more because of a lukewarm festive season. During the festive season, the entire auto industry showed a sluggish growth due to several macro-economic factors; rising fuel prices being the major one coupled with onetime payment of the insurance premium.

Financial Quarters Average Spent On Discounts
FY2018 Q1 ₹ 16,600
FY2018 Q2 ₹ 15,200
FY2018 Q3 ₹ 17,900
FY2018 Q4 ₹ 13,900
FY2019 Q1 ₹ 15,200
FY2019 Q2 ₹ 18,800
FY2019 Q3 ₹ 24,300

In a bid to clear inventory, Maruti Suzuki offered an average discount of ₹ 24,300 in the third quarter of FY2019 which was significantly higher than many of the previous quarters. The company had offered an average discount of ₹ 15,200 per model in the first quarter of FY2019 which increased to ₹ 18,800 in the second quarter. Moreover, in the last quarter of the previous fiscal year (FY2018), Maruti Suzuki spent just ₹ 13,900 in terms of discounts per model.

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Source: Business Standard

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