InvestorQ : InvestorQ-Ask,Answer & Share All About Finance!
Riya Dwivedi made post

Can you tell me about the latest leasing scheme launched by Maruti and how it will help them compete?

user profile image
rhea Babu answered.
1 month ago

Maruti has recently announced the launch of its vehicle leasing service. This scheme aims to promote innovative forms of vehicle ownership models when the affordability of customers has nose-dived due to the covid-19 induced economic slowdown. Auto sales had been under pressure for some time and COVID-19 only proved to be the last straw.

For this purpose, Maruti has tied up with Orix Auto Infrastructure Services, a subsidiary of Japan-based Orix Corporation to launch vehicle leasing service for Indian markets. Cars will be available for subscription will be initially available on Swift, Dzire, Vitara Brezza and Ertiga. This is likely to give a push to sales of some of its mid and high end vehicles.

This will also give Maruti a competitive edge vis-à-vis its other competitors like Hyundai Motors and Mahindra & Mahindra. Both these companies are already offering their vehicles on lease. So this puts Maruti on par with competition in terms of offering the complete palate of offerings to customers. It is also an additional revenue stream for Maruti.

Vehicle leasing is popular in the US and Europe, while Indian automakers have only just about started this service in the last two years. There is sense urgency for Maruti because sales of passenger vehicles are likely to fall by 25% in FY21. This leasing addition could offer a more economical method of owning the car and reduce cost of ownership.