Indians can now drive their dream car on zero down-payment!
With the advent of technology, the world did indeed become a much smaller place. People started getting influenced by various cultures around the world and sometimes these cultures did influence an entire section of a population. What I’m on about is - westernisation. The West has influenced us Indians a lot in the past, and the most recent one to trend seems to be in the auto sector.
Leading car manufacturers for India such as Hyundai, Mahindra and Skoda have started offering their cars on a lease. What this means is now, working individuals or small, mid-sized companies can drive home their desired car by opting to lease the vehicle and paying just the monthly lease amount (which includes maintenance charges as well) as opposed to the popular purchase-via-loan route which consists of paying EMI (with interest, of course) plus a hefty downpayment for the purchase while further spending on the vehicle’s maintenance in the long run, as well.
To put things into a monetary perspective, Hyundai India is now offering the Creta, in its base variant, at a monthly lease rental of Rs 17,642 which is inclusive of road tax along with GST. Purchasing the same via the loan route would cost you an EMI of Rs 18,901 for five years while shelling out close to Rs 2.73 lakhs for the downpayment of the SUV.
Czech manufacturer Skoda Auto promises savings amounting to roughly Rs 17 lakhs if one plans to lease the Superb luxury sedan, albeit in its petrol-engine, manual-transmission trim instead of purchasing one. Electric scooter start-up Aether seems to be the front-runner for leasing in the two-wheeler segment as it has started offering its scooters on a lease but at a premium. Consumers can opt for the battery-powered Aether 450 scooter on a monthly lease of Rs 2,500 along with a refundable down payment of Rs 75,000, to be paid back by the end of three years.
Carmakers like Maruti Suzuki are keen on jumping in on this but at present, they are closely observing this trending purchasing method as leasing can solve a lot of ongoing problems for both- the carmaker and the consumer.
For the carmakers
India is a price-sensitive market. Reluctant is the word if one wants to describe an Indian’s desire to spend money and this has been reflecting in the automobile segment for the past couple of months. With the sales figures constantly showing up in red and inventories stacking up at dealerships, carmakers can now look to offer their products at attractive leasing amounts which negate the ‘reluctance-driven’ topics such as high down payment and interest on EMI.
If the concept of leasing booms in the subcontinent, manufacturers may even report high profitability by producing lesser cars and circulating these cars to different sections of the society while incurring lesser ownership changes and hence depreciation of their products.
App-based transportation services have made lives easier for the millennial because they have eliminated the large bag of worries which car-owners carry all along. Worries like having no parking space, maintenance charges, high EMIs, initial down-payment gone from the savings account, the resale value of the car which might point towards a paltry figure, courtesy - depreciation and finally, the unspoken cost of insurance.
Leasing, however, can solve the majority of these issues as consumers can evade initial down-payment and save their savings account from going nil, no hike on the car’s price tag as there is no interest, maintenance charges being shouldered by the company and finally, no actual ownership implies no worries of depreciation. Just parking space is left which you’ll have to figure out yourself. (Hey! not everything can be presented on a plate)
But what happens after the lease period is over?
Well, at the end of the leasing period, consumers will have to return the car back to the company. If the consumer wishes to return the car before the end of the leasing period, the former will have to pay a certain amount to the company, depending on the time which spans the supposed date of return vs the actual date of return. It may happen that you’ve gotten to like your leased vehicle so much that you don’t want to give away. Well, in that case, don't! Users will also have an option where they can buy the vehicle from the company, albeit at the end of their leasing period.
Hyundai seems to be the frontrunner here as it has put its entire product line-up, open to lease by working individuals, small or medium firms and enterprises, in collaboration with ALD Automotive India. Skoda India has also joined the bandwagon, in partnership with Orix, expects a 5-10% rise in sales volume via this purchasing pattern.
At present, the business of car leasing operates at less than a single per cent pan India, which again majorly comprises of corporate cabs. With developed countries like USA, UK, Germany and France operating at 30%, carmakers operating in India should look forward to amplifying in this segment as it might be the key to an easier and exponential rise in car sales and usage.
Would you consider leasing a vehicle now? Or still prefer the traditional method of owning one via loan or green (in our case, pink as well) bills? Let me know in the comments below!