Owning a vehicle has always been considered as a mark of status in society, and especially so in India. It is a special day when your first vehicle is booked and an even more special one when your car arrives. The vehicle gets all the special treatment and is even considered to be a member of the family by many. It is no wonder then that many families in India own cars that have served them for over a decade now.
Even if a new car enters the family, the old one is still quite often retained. Supporting this decision is probably the fact that the value of a new car depreciates by about half in a period of 3 to 5 years. However, with the emergence of online transportation network companies such as Ola and Uber in India, many people have begun to reconsider the option of buying a car for themselves, especially since it entails a considerable investment, not to mention the insurance and the maintenance costs.
With an overall slowdown in markets across the world, the sale of passenger vehicles seems to have dropped as well and automotive companies have been looking to find innovative solutions in order to boost their sales. Many of them seem to have noticed the shift in mindset of the newer generations, given the popularity of ride-sharing services, and have started offering lease programmes and subscription services to their customers. The Korean automotive giant Hyundai, for example, is offering the Creta (its base version) for five years at a rent of around ₹17,500 per month (inclusive of taxes). In collaboration with ALD Automotive India, Hyundai has made its entire collection available to professionals and enterprises for lease.
Taking a car on lease, the customers do not have to worry about issues such as a hefty down payment (with leasing, it is quite often zero), the resale value of the car and even the maintenance cost (which is usually included in the EMI). However, the rental pricing varies with respect to the period (shorter periods have more expensive rentals) and ending the lease before its due date can invite a stiff penalty. Working professionals these days are, more often than not, on the move and their preferences tend to change from time to time as well. As a result, many of them find it encumbering (and not just financially either) to make a considerable investment on the purchase of a car, especially since its value depreciates so quickly. In the long term, however, leasing is still a more expensive option than buying a car, factoring in the money received after the sale of the car.