H S Lheem, MD of Hyundai Motors, expressed his reservations on the fate of sales in the auto industry well into 2009, saying, “We are surviving on technicalities. Despite economic recession of 0.3 per cent, since it was expected to be 0.5 per cent, our stocks rose. We are even considering bearing the burden of marketing costs with our dealers in different countries to promote sales.”

In mid-November, Honda announced it was slashing the price of its Hybrid Civic Model by Rs 8.14 lakh, bringing it down to a mere Rs 13.36 lakh from Rs. 21.50 lakh and saw a marginal increase in its sales.

Ford has announced a Rs 91,000 cut in the price of the EXI petrol variant Fiesta, bringing down its ex-showroom price from Rs 6.2 lakh to Rs 5.29 lakh and an equally substantial cut of Rs 51,000 on the diesel variant which takes its price to Rs 6.59 lakh, effective immediately, but for next 10 days. Hyundai intends to spend December wooing customers with the appeal of 1998 flagship model Santro GL for as little as Rs 3 lakh, its introductory price of ten year ago.

Major players have quickly acquiesced to the demand of the FM to cut prices in the hope of special incentives such as excise duty cuts in the government’s impending Rs 75,000 crore economic stimulus. Many government official are especially worried about the automobile and real-estate sectors as they have a huge spillover effect. “The industry is asking for excise cuts and restoration of some benefits for exports,” said Surajit Mitra, additional secretary, ministry of heavy industries and public enterprises. “We will engage with the finance and commerce ministries to discuss how the industry can be helped.”

But analysts remain unconvinced of the ability of discounts to translate into sales because of the mounting negative factors such as recession, the fear of job loss, salary cuts and, most seriously, financial crunch.

Baja Auto is planning a low-interest finance scheme for dealers at 7.99 per cent to boost sales. In addition, it will introduce a new motorcycle every month for the next six months in the hope that a revamped product mix will also entice skittish customers.