Sunday, December 7, 2008

Carmakers offer discounts to clear stocks at retail end

Our Bureau

New Delhi, Dec. 5 Automobile companies are all set to entice customers by offering them the best deals on cars. Having witnessed the sharpest drop in sales last month and a pile up of inventory at the retail end, companies and dealers are offering high concessions on various models to exhaust their stocks.

Maruti Suzuki, for example, has almost doubled the concession on Wagon R and M-800.

The company increased discount on its Wagon-R to Rs 25,000 plus insurance for December as compared with Rs 12,000 and insurance the previous month. Even on M-800 it is giving a price cut of Rs 4,500 and insurance as compared with Rs 2,000 last month.

On its compact car, Alto, the concession is up to Rs 7,000. Hyundai too announced selling its flagship model Santro at Rs 2.99 lakh. The slowdown in the economy and reduced financing on vehicles by banks have led companies like Hyundai to provide attractive deals even to customers for its newer and best selling models like i10 by offering free accessories worth Rs 5,000 and insurance. US carmaker Ford’s Indian subsidiary has lowered prices of its mid size sedan Fiesta by Rs 91,000.

Dealers say that the discounts offered this month have been tempting as next month the model year will change. “Many of the customers do not want to buy a year end model. Hence to clear the stocks, companies usually offer good deals,” said a dealer.

The strategy of higher cuts is also amid fears that December could be worse. Almost all auto companies posted the sharpest decline in sales in November. Maruti Suzuki saw domestic sales fall by 27 per cent, Hyundai by 23 per cent and Mahindra by 12 per cent on its Logan.

“November has been very dull for all manufacturers. And December being the year end is even worse. So all companies want to liquidate their stocks,” said a Honda car dealer.

Markets this week

The Sensex opened on a positive note on Monday but changed direction and closed more than two per cent lower following a spate of bad news from the domestic economy and weak global equity markets. The Sensex ended 252 points down at 8,839 while Nifty closed at 2682, down by 72 points.

LIC takes its stake beyond five per cent in three public sector banks - State Bank of India, Bank of India and Allahabad Bank, according to BSE data.

During October-November, LIC acquired 1.67 crore shares representing 2.64 per cent stake of SBI from the secondary market. It also acquired 9.6 lakh shares of Bank of India on 11th November, hiking its stake to 5.14 per cent. It bought over 1.09 crore shares in Allahabad Bank, taking its stake to 8.84 per cent as on November 12.

The mutual fund industry's assets under management (AUM) fell seven per cent in November. Their AUM now stands at Rs 4,02,029 crore against Rs 4,31,860 crore in October.

For efficient use of margin capital by market participants, SEBI on Tuesday announced extension of cross margining across the cash and derivative segments for all categories of market participants.

Earlier, this facility was available only for institutional trades. However, only the index based stocks and stock futures will be eligible under the new cross-margining scheme.

Shares ended weaker on Tuesday, led by blue-chips and auto companies, over concerns about the global economy, but short-covering towards the end pared early losses.

The Sensex ended down 100.63 points at 8,739 and the Nifty fell 25 points to 2,658.

Indian Shares closed flat on Wednesday after a volatile session. The Sensex ended up 8 points at 8,747. after rising to 8,855 in opening trade, buoyed by positive global cues and expectation of interest rate cut by the RBI. On the NSE, the Nifty index closed flat at 2656.

NSE has revised upwards the market lot for 243 stocks in the derivative segment.

As per data put out by NSE, these changes would take effect on the farther month contracts - March 2009 series. The upward revision ranges between two and 14 times.

The benchmark indices surged on Thursday, sparked by a lower inflation rate, and expectations of a stimulus package from the Government to boost the economy.

The Sensex surged by 482 points to close at 9230 and the Nifty gained by 131 points to end the day at 2788.

The inflation rate for the week ended November 22 was at 8.4 per cent, which created hopes of a substantial cut in interest rates by RBI on Saturday.

Indian stocks tracked the European markets which were up in early trade as the European Central Bank, Britain and Sweden made big rate cuts to shore up their economies.

Indian companies will now have one year's time to launch their IPOs or rights issues after the clearance of draft prospectus by SEBI.

SEBI at its board meeting on Thursday decided to extend the validity of its approval for IPOs and rights issues from three months as of now to one year, subject to updating of documents by the issuer.

Fund managers welcomed the decision on Thursday making listing mandatory for close ended schemes of mutual funds, and disallowing early exit from these schemes.

The European Central Bank on Thursday slashed its benchmark lending rate by 75 basis points to 2.5 per cent.

The Bank of England has cut the bank rate by 1 percentage point to 2 per cent.

The BSE benchmark Sensex on Friday tanked 265 points to close below 9,000-mark on heavy selling by funds in blue-chips led by the information technology, realty and metal segments owing to profit booking at higher levels. The Sensex closed at 8,965.20, down 264.55 points. On the NSE, the Nifty ended lower by 73 points at 2,714.40 points.