Top automakers offer vehicles for monthly rental with no down payment
Consumers can now drive home their dream car without making a down payment, enjoy hasslefree maintenance services and upgrade to a new product of their choice, thanks to personal lease programmes from automakers such as Hyundai, Mahindra, Skoda and Fiat.
South Korean auto major Hyundai is offering the base version of the SUV Creta at a monthly rental of Rs. 17,642, inclusive of road and goods and services tax (GST), for a period of five years. Buying the same version would entail a down payment of Rs. 273,000 (US$ 3,900) besides equated monthly instalments (EMIs) of Rs. 18,901 for five years.
Skoda Auto is promising savings of nearly Rs. 1.7 million on leasing a petrol-powered, manual transmission variant of luxury sedan Superb. In the two-wheeler space, Ather Energy has started extending personal lease options on premium, battery-powered scooter Ather 450 for a monthly rental of Rs. 2,500.
The company refunds the entire down payment of Rs. 75,000 at the end of three years.
India's automakers need to find ways of energising the market-passenger vehicle sales declined 19% in the first two months of this fiscal amid a broader economic slowdown.
In India, where pride of ownership has driven vehicle purchases for decades, the personal vehicle leasing market is at a nascent stage. However, with younger, millennial consumers preferring ride-sharing services, industry veterans say there has been a shift in mindset.
Consumers now prefer to drive a vehicle unencumbered by the investment- financial and otherwise--of owning a car and the potential is huge, said Vikas Jain, national sales head at Hyundai Motor India Ltd (HMIL).
Hyundai's entire portfolio is available for leasing by salaried individuals, working professionals, small and medium enterprises, corporates and public sector companies in collaboration with ALD Automotive India.
"The leasing scheme has been curated keeping in mind the cost efficacy of the product available for lease vis?-vis a product purchased outright," said Jain. "Hence the leasing deals are very lucrative for customers who change cars every three-four years and like to try their hand on new products available in the market."
Leasing options have made Mahindra & Mahindra's SUV portfolio accessible to a wider section of people.
"The benefits of leasing to the customers include lower or no down payment, zero risk on resale value of the vehicle, hassle-free usage, and a fixed EMI inclusive of maintenance cost," said Veejay Ram Nakra, chief of sales and marketing at Mahindra & Mahindra's automotive division. "As a result, leasing is gaining increasing acceptance in the market and offers greater convenience compared to actually owning a car."
At the end of the lease period, the car goes back to the company. If a vehicle is returned before the term is over, the user will typically have to pay a certain amount to the company, depending on the time remaining for the lease to end. The person can also choose to buy the car.
The car leasing business overall currently has a penetration of less than 1% in India, mostly powered by the corporate fleet segment. That compares with an average 30% in developed markets.
India's biggest carmaker is keeping a close eye on developments.
"The segment is quite big in many countries," said Shashank Srivastava, executive director for sales and marketing at Maruti Suzuki India Ltd. "We have to see how it develops here, but the initial signs there are some movements towards it. It will become more interesting in the future.
We keep watching it, how big it will be and what will be required to be present positively in this segment."