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Posted On: 9 February 2010 02:53 pm
Updated On: 12 November 2020 02:10 pm

Car prices set to see steep fall

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With their sales having dipped to record lows last year, automobile dealers in the country are busy mulling ways to get rid of unsold 2009 stocks. The slump is so alarming that some dealers are even preparing to sell at discounted rates 2010 cars whose stocks have already arrived. Some dealers have already launched promotions while others are about to follow suit. The automobile market remains a buyer’s market and the glut is such that one can expect the prices of most new models of nearly all brands to be down by at least 10 percent. “The customer is the king. We are still battling a slump,” a market source said. He, however, added that the market was optimistic that the situation would improve this year due to the recessionary trend easing. American cars are already selling at prices of 2003-04 levels, while the situation as regards Japanese cars is not much different due to the dearth of customers. The situation being such, one should expect the dealers to launch a blitzkrieg of promotion-related advertisements in the local newspapers sooner rather than later. “We are just waiting for the advertising campaigns to kick off in the local media in a big way,” said a market source. Sources, though, swear the low demand is only for economy cars whereas the local luxury car market has been doing quite well even when there was so much talk of the global financial crisis adversely impacting consumer confidence and behaviour. “The sales of Mercedes and BMWs have been going on well,” said a market source. More than the recessionary pressures, market operators blame the banks here for acting tough with customers seeking car loans. Some banks like Standard Chartered have stopped dispensing auto loans altogether, while others have included clauses in the standard letters they want the employers of the potential customers to sign. These clauses put the onus on a company for informing the bank in case a borrower is sacked or quits the job on his own and leaves the country for good. “Earlier, the banks had no such clauses so it was easier to get a letter signed by a company,” said an expatriate who took a car loan from Qatar Islamic Bank (QIB) a few years ago. Some auto dealers have inked deals with some banks to offer “easy” loans for their cars, but to access a loan is easier said than done, say market sources. “We hope the banks liberalise car lending norms a bit so the demand picks up,” said a market source. He added that he hoped the demand to pick up by 10 to 15 percent this year as the financial situation and the bank lending norms improve.