Life146;s getting better, and cheaper

WITH the economic slowdown casting a shadow over wages and salaries across Corporate India, consumers have at least one reason to smile: Pri...

WITH the economic slowdown casting a shadow over wages and salaries across Corporate India, consumers have at least one reason to smile: Prices of almost all consumer goods and fast moving consumer goods FMCGs have either come down or remained stagnant as companies offer freebies and discounts to prop up the consumer sentiments. This effectively means that the monthly budget of an average Indian has come down substantially despite his salary remaining stagnant.

From housing loans to white goods to car-finance loans, air travel and even cell phone air time rates have hit an all-time low. Companies are doing everything possible to lift consumer spending by dropping prices. And, yes do not rush to the nearest shop as yet as analysts say this festival season consumer goods companies are set to offer biggest discounts ever dolled out to consumers. Says Sangita Shetty, a Mumbai-based consumer: 8220;I bought a Samsung flat TV last week as the prices have come down by almost 30 per cent since 2001 rates. What8217;s more, after bargaining the dealer gave me a further discount to the rack price.8221; The prices of refrigerators have fallen 10 per cent especially in the frost-free segment.

In order to clear its inventories, consumer companies from car makers to microwave makers, the discounts are the highest in the recent history See chart. 8220;I bought a brand new Siena from a dealer at a discount of Rs 1 lakh as the company wanted to clear its rising inventories to make way for the New Siena,8221; says Rohit Kumar, a Mumbai-based lawyer.

Sales of Maruti 800 have shot up by over 50 per cent as the company brought the car8217;s price to below Rs 2-lakh level. Company officials say a majority of two-wheeler customers are graduating to buy a car and M800 is the first choice. 8220;Many buyers in the rural areas are coming forward to buy the M800 and Omni. Even in the metros the car has started doing well after we reduced the prices,8221; says a leading Maruti dealer in Mumbai.

Kumar is happy that not only the car prices have come down even the loan taken by him is far cheaper than earlier. In the last two years, car loans rates have cone down by over 3 to 5 per cent depending upon duration of the loan fuelling demand in a recession-hit market. According to estimates, over 70 per cent of cars sold through dealerships are through the financing route which is expected to rise in future.

The fact that car finance rates have crashed with effective rates for the consumer falling to sub-10 per cent levels have also resulted in increased business potential. 8220;Car finance rates have hit rock bottom. This would also help consumers in upgrading to new models,8221; says a Kotak Mahindra Primus official.

Car finance rates, which religiously reflect the interest rates in the economy have in the course of the last five years come down to the current 12-13 per cent mark from 20 per cent odd levels. Add to this dealer discounts and the incentives being thrown in by manufacturers and the rates crash to sub-10 per cent levels.

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And if you are not planning to buy a car go for the home loan as rates have come down to below 10 per cent levels for the first time in banking history. 8220;The housing industry is witnessing a boom only due to lower interest rates. Besides, cost of an apartment even in a city like Mumbai has crashed by 20 per cent,8221; says A. Singh, a real estate consultant.

Analysts say as the salaries in the corporate sector have almost remained stagnant over the last few years due to the ongoing slowdown, consumer spending is showing signs of slowing down. However, due to price cuts and heavy discounts, consumers are again coming back to shops to buy goods. The 8.7 per cent rise in auto sales in the first four months of the current fiscal confirms that price cuts does help in selling more.

Take for example, Jet Airways and Indian Airlines which reduced their fares managed to increase their passenger load factor PLF to around 70 per cent from 60 per cent in an otherwise bearish market. The off-season discounts have helped many Indians to travel by air while airlines managed to make some money out of empty seats. 8220;A holiday is now costing at least 50 per cent less than last year as both airlines and hotels are offering over 50 per cent discounts,8221; says Rajesh Mishra, a travel agent.

Finally, the prices of essential foodgrains are showing signs of marginal decrease if not a fall. Rice, wheat and pulses prices are still hovering at last year prices despite reports of scanty rainfall and near-drought in most part of the country.

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So don8217;t worry if your salary is showing no signs of picking up. Be happy that at least prices are not going up.