Date:25/02/2006 URL: http://www.thehindubusinessline.com/2006/02/25/stories/2006022501721200.htm

Back No pre-Budget blues for automobile cos

Neha Kaushik

New Delhi , Feb. 24

The sharp drop in sales of high-priced consumer items such as automobiles and durables seen in the days running up to the Budget may be missing this year around, thanks to attractive consumer schemes brought out by manufacturers, especially of passenger cars.

However, consumer durable sales, which have been sluggish since the beginning of the current year, have witnessed a further slowdown over the last week or so.

Discounts galore

Meanwhile, several car manufacturers are doling out huge discounts on their vehicles to maintain a momentum in sales. In fact, discounts on several passenger car brands are currently up to Rs 50,000 with companies enticing customers via aggressive advertising with a promise of selling cars at the same or lesser prices "as after the Budget".

"A sharp drop in sales has not been there this time around with companies giving huge discounts and coming out with gift schemes. This has helped to maintain the interest level among consumers, who would ordinarily have waited till after the Budget to buy a car as they may be able to get the same price-offs now. All the schemes end on February 27," says a Delhi-based passenger car dealer.

There has been increased expectation of car prices coming down after the Budget, after the Finance Minister hinted last year that there may be excise concessions for small cars.

Durable majors, however, have seen some degree of sluggishness in sales in the second half of the month. "There is a perceived slowdown in sales as consumers expect prices to go down after the Budget," says Mr Suresh Khanna, Secretary-General, Consumer Electronics and Television Manufacturers Association.

However, there has been no indication of prices of consumer durables coming down after the Budget.

Analysts point out that the price of high-end durables such as plasma televisions and LCD TVs, which are currently being imported, may drop post-Budget as the peak rate of customs duty may come down from 15 per cent to 10 per cent.