In order to find newer ways to attract buyers and recover from the current slowdown, Maruti Suzuki will venture into car leasing and fleet management service to offer all-inclusive services like vehicle acquisition, insurance, maintenance and value-added services.
Crux of the Matter
After a 3-month lockdown, Maruti Suzuki India which had recorded zero sales in April has resumed its manufacturing operations from May 12. As the economic activities resume and come back on track, the car manufacturer recorded domestic sales of 51,274 units in June 2020 which is a 54% drop in sales volume compared to June 2019.
Car Leasing – A New Business Model
Maruti Suzuki has tied up with ORIX Auto Infrastructure Services Limited, Japan to introduce #MarutiSuzukiSubscribe vehicle lease subscription service in the Indian market. The company in the initial phase will offer cars like Swift, Dzire, Vitara Brezza and Ertiga, Baleno, and Ciaz for subscription as a pilot project in Gurugram and Bengaluru. All the cars leased will be brand new.
Key Features Of The Service
Maruti Suzuki Subscribe will allow individual car buyers to choose from a variety of Maruti Suzuki cars with flexible lease tenure options of 24, 36, and 48 months. Once you decide the tenure, you pay the pre-determined monthly amount with no additional maintenance, service costs, or down payment required. There are two categories of subscription: Corporate Leasing and Retail Leasing.
How To Avail The Service?
The customer has to fill up an application form with the choice of vehicle and once the application is approved, the vehicle is made available within 15 days of the booking. The lease amount will be determined on the basis of documents submitted for credit appraisal. Before the delivery, an agreement is signed and all necessary documentation formalities will be completed. After the delivery, all post-sales operations like maintenance, service, insurance claims will be taken care of by the leasing partner, Orix.
Customers also get access to 24×7 roadside assistance with their monthly payment and the company has also provided an option to extend the lease tenure if required. There is a lock-in period depending upon the tenure while leasing cars and if you wish to return the car before the lock-in period is over, you will have to pay for the remaining months of the period and additional 1-3 months’ cost.
Existing Players in the Market
Vehicle leasing services are popular in the US and Europe markets whereas, in India, its penetration is less than 1% of the total volume. Maruti’s rival Hyundai Motor India already offers leasing services in collaboration with ALD Automotive India.
Even Mahindra has rolled out a subscription-based passenger car ownership model in partnership with Revv which is a startup that operating in the car-sharing sector. China based SAIC-owned MG Motor India and Volkswagen also offer subscription services allowing customers to lease all BS6-compliant cars with a minimum lock-in period of 2-4 years.
Experts believe that the vehicle subscription model has immense possibilities in the India market as it will provide an alternative to owning a car and it will fulfil the need gap of the requirement of cars for any kind of individual and business applications.
- A novated lease is a motor vehicle lease that has been novated, that is, the obligations in the contract have been transferred from one party to another. A lease is novated with a three-way agreement between the lessee, the lessor, and a third party.
- Suzuki Motor Corporation is a Japanese multinational corporation. In 2016, Suzuki was the eleventh biggest automaker by production worldwide and Suzuki’s domestic motorcycle sales volume is the third-largest in Japan.
- The Maruti Omni was a microvan manufactured by Maruti Suzuki. Sold simply as the Maruti Van, this was the second vehicle to be launched by Maruti Suzuki. In April 2019, Suzuki announced they would discontinue the Omni after 35 years of production.