Bajaj Auto is offering interest subvention scheme on its Discover range of bikes, including the 100T:

Bajaj is providing an interest rate scheme on its Discover range, including the recently introduced Discover 100T. The scheme is offering low interest rates of 7.99% for a one year loan vs. existing interest rates of ~11%. Similarly, interest rates for two year duration loans are now at 9.99% and three year loans are at 10.99% vs.~13% earlier.

 

This would imply a saving of ~5% for consumers (the cost of the scheme will likely be borne by the OEM, financier and dealer)

 

Table: Interest Rate Subvention

Duration	New Rate	Earlier Rate
1 year	7.99%	10.99%

Source: Company adverisement

 

Our View: Re-iterate UW on Bajaj Auto: Given slowing industry sales, Bajaj Auto is resorting to financing / discounting schemes. Further, competition is likely to intensify as Honda is raising capacity by +40% to 4m units. Honda has announced the launch of the new 150cc CB Trigger bike – which will be positioned in the sports segment with its tag line: 'Untame Yourself'. The model will likely compete with Bajaj Auto's Pulsar. (Though Honda CB Trigger has been unveiled, the bike will only be available from May 2013, while the bookings will open next month). We have recently downgraded our rating on Bajaj Auto to UW and re-iterate our cautious stance on the two-wheeler segment. 

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