In a move that has the potential to radically alter the way cars are purchased in India, Maruti Suzuki today unveiled a new ‘subscription’ model of car sales that starts at just Rs 14,463 per month, including all maintenance, taxes, registration charges and insurance.
For Rs 14,463, Maruti Suzuki will offer the customer a brand new Swift Lxi in Delhi.
The customer, however, has to enter into a four-year subscription agreement.
Details of the cancellation policy were not disclosed by the auto maker.
Besides Swift, other models available under the subscription scheme include Dzire, Vitara Brezza, Ertiga, Baleno, Ciaz and XL6.
TO BUY OR TO RENT?
Assuming that the current interest rate available on car loans is 11%, the payment of Rs 14,463 per month is equal to the current EMI of a Rs 5.61 lakh loan.
The current price of a Maruti Suzuki Lxi is Rs 5.21 lakh in Delhi, and taxes, maintenance and insurance are likely to cost another Rs 2.0-2.5 lakh or so over the four-year period. In other words, if one were to buy the car with all the above guarantees, one would have to take a loan of around Rs 7.2 lakh.
The EMI on a 7.2 lakh car loan comes to around Rs 18,609 per month.
Hence, by going for the subscription scheme, a person saves around Rs 4,100 per month in the form of reduced monthly outgo. If the interest is 10% instead of 11%, the savings will be around Rs 3,800 per month.
In other words, by the end of the four-year period, the person would have saved a total of close to Rs 2 lakh.
Once the subscription tenure ends, the person will have the option of buying the car ‘at the market price’, or moving on to another new vehicle.
In other words, if one were to take a loan to cover the purchase price of this vehicle — along with all the other expenses such as maintenance and insurance — he or she would end up paying an extra Rs 2 lakh or so, but would end up with the car in his or her name after four years.
The question of whether to go for the loan option or the subscription option then boils down to whether the car will be worth substantially more than the extra Rs 2 lakh that the person would have paid by way of principle and interest over the four years of the loan.
Unlike the loan, subscription schemes also offer easier exit clauses, though Maruti Suzuki has not revealed what the cancellation terms are.
OTHER DETAILS
Besides the four-year tenure, subscriptions are also available for as less as one year, but the charges will be higher.
The scheme is available in Delhi, NCR (Noida, Ghaziabad, Faridabad, Gurugram) and Bengaluru, and will be extended to 40-60 cities in the next 2-3 years.
“The comprehensive Maruti Suzuki Subscribe initiative offers customers the multiple advantages and peace of mind from botheration of maintenance costs and insurance renewal,”said Shashank Srivastava, Executive Director (Marketing and Sales) Maruti Suzuki India.
“The programme is especially focussed to bring convenience to the individual customers. Besides flexibility of tenure, it offers nil down payment and includes registration costs, insurance and its renewal as well as routine maintenance. Additionally, the roadside assistance service brings total peace of mind to the customers.”
Customers can opt for a white number plate (registered in the name of customer) or black number plate (registered in the name of Orix India).
Orix India will take care of the vehicle maintenance, insurance coverage and road side assistance through Maruti Suzuki’s dealer channel.