Maruti dealers can charge a maximum of INR 500 as processing fee for cancellation of car booking
The extraordinary circumstances of 2020 have brought India’s already weakening economic health to its knees. This has forced Indians to rethink their expenditure by checking purchase plans, especially when it comes to depreciating assets such as automobiles.
Mass cancellation of bookings
As India started making baby steps towards the so-called new normal after a prolonged period of lockdown, the automobile industry witnessed cancellation of bookings on a large scale. Temporary and permanent layoffs across different sectors and growing uncertainty in businesses have made people averse to committing to significant EMIs that are usually associated with buying new vehicles.
Automakers who usually sit on huge number of order backlogs like Maruti Suzuki, Kia, MG Motors, etc., started to feel the pinch of mass cancellations bookings that were made earlier. While this obviously leads to reduced quantum of business for OEMs, it also represents other inconveniences.
Booking data is one of the important parameters used by the OEMs to plan their production, vehicle allotment to dealerships, stock rotation etc. A considerable amount of time, effort and money are spent in generating the booking data but the recent cancellations have made this process significantly less productive.
Maruti’s internal circular to its dealers
According to an internal memo sent by market leader Maruti Suzuki to its dealers, the automaker reveals that one out of every three bookings captured in the system are being cancelled due to various reasons. According to the automaker, such high proportion of cancellations create a mismatch in production planning and real customer demand.
In order to compensate for the inconvenience caused by these cancellations, Maruti has authorized its Nexa, Area, Commercial and True Value dealers to charge a processing fee of up to a maximum INR 500 when a customer decides to withdraw the booking. The service charge is applicable for all bookings made on or after August 7, 2020.
Almost all OEMs offer full refund of booking amount in case of cancellation. The idea is to encourage prospective customers to register their strong interest in the product without having to worry about losing their money. While Maruti’s implementation of processing fee is not likely to discourage customers from making a new booking or cancelling the existing one, it could be seen as one of the many hidden charges associated with showroom experience (the handling charges being the most controversial one).
