Should auto companies make fuel free with cars?

Buy a Citroen in the UK and you get free fuel for a year. “Until 31st December 2011, customers purchasing a new Citroen will be offered free fuel for a year. The offer is available on Citroen C1, C3, C3 Picasso, New C4, C4 Picasso or Grand C4 Picasso, with a pre-loaded MasterCard debit card being provided to cover a year’s worth of fuel. The amounted pre-loaded on the card will be calculated for each model based on its combined cycle fuel economy with an annual mileage of 10,000 miles (16,000 km), making the offer worth up to £1500,” reported carpages. There could be more to come. [caption id=“attachment_103791” align=“alignleft” width=“380” caption=“First time owners learn, very quickly and with a lot of pain, that the EMI is the least of their worries. Getty”]  [/caption] “Now, however, I’m prepared to make another fuel-related prediction: that the next logical step will be for an as yet unnamed, forward-thinking manufacturer to genuinely revolutionise the car buying and ownership experience by offering an All-Inclusive Driving (AID) package that includes fuel, servicing, road tax and insurance for at least 12 months,” says Mike Rutherford in The Telegraph. This is all happening in the UK. What could be done in India. First time owners learn, very quickly and with a lot of pain, that the EMI is the least of their worries. In 2004, Maruti changed the way cars were being sold in India with a ‘dream’ EMI of Rs. 2599. ‘Maruti Udyog is making the country’s cheapest car — the Maruti 800 — even more affordable by almost halving the down payment figure to Rs 21,000 and extending the loan repayment period from seven to eight years which will bring down the equated monthly installment (EMI) to Rs 2,499 from Rs 2,599," reported the Financial Express then. Since then, even premium cars have used EMIs as a selling tool. Mercedes Benz, for example, announced the Rs. 22,999 EMI in 2010 for the C Class. Or buy an E Class at Rs 29,999 per month.

With a naïve first time user not realising that the EMI is only one of many costs he or she will have to incur, disillusionment sets in quickly when the reality dawns. For example, if a car gives you 16 km per litre, at the current price of Rs 71 in Mumbai, the cost of running a car for 16,000 km (the amount that Citroen, in the UK, pays for) would be Rs. 71,000 annually – almost Rs. 6,000 per month. Now add the servicing, the cost of insurance, the cost of spares, replacement of tyres every few years, and so on. It all adds up to a tidy sum – difficult to manage if one hasn’t planned for it. What if, as Mike Rutherford suggests, auto companies in India offered an AID package? Not for the reasons it would work in the UK, but for very different reasons unique to India – that there are first time buyers in the millions who are initially ignorant of, and subsequently confused and daunted by the real cost of owning and running a car? What if the AID package went way beyond the first year, to seven years? What if your EMI changed to a new, higher figure — but that was the only payment associated with your car — and that there were no more surprises? The TATA Nano could certainly benefit from such a package, as would any entry level car in the market. It’s worth a thought. Does anyone in the auto industry in India want to change the rules of the game? Here’s your chance.