Saturday, December 6, 2014

Whether Chevrolet adapting to unfair trade practices (UTP) by misleading the consumers?

Chevrolet has come out with an advertisement in The Times of India dtd. 27/11/2014 for their "Beat" model. 
The Company offered following benefits through the advertisement:
1. Insurance @ Re.1/- for 3 years (benefits upto Rs. 47,000/-) plus
2. Accessories worth Rs. 20,000/-  is misleading on several counts plus
3. Cash benefits Rs. 10,000/- plus
4. Loyalty Bonus Rs. 20,000/- plus
5. Corporate Offer Rs. 3,000/- 

It states in bold box "Total Benefits Rs.1,00,000/-"

I am just giving below an analysis of the above discounts and offers as such offers are fashion of the day as it suits companies, traders, dealers etc. I am confident that the analysis could be of informative for all those who have already purchased or those who are likely to purchase the vehicles with such kind of offers and discounts. I am just wondering if those who have already purchased "Beat" model, could relook as to whether they got real benefits of Rs. 1,00,000/- in their purchase.
1. This special offer was valid for 4 days only from 27th November to 30th November 2014. The question is why a hefty offers and discounts of Rs. 1,00,000 is applicable only for 4 days. Is it that the cost of the vehicle will be increased by Rs. 1,00,000/- after 4 days and any rationale behind such increase or the limited time period of 4 days is to attract the customer and put a psychological pressure to take hasty decision without any proper market survey and analysis.
2. The advertisement offer of benefits of Rs.1,00,00/- includes discounts/benefits namely:
a) Cash benefits of Rs. 10,000/- . However, on inquiry it was revealed that the said discount is applicable if you are having any make any model car and the perspective buyer need to produce a copy of RC and insurance. The said advertisement does not state anything like that. In a layman language cash benefit is termed as benefit given in the cash and their is no rider attached to the scheme in the advertisement. Therefore the total benefits offered as Rs. 1,00,000/- in the advertisements stands reduced by Rs. 10,000/- for those who are the first timer in purchase of vehicle.

b). The said advertisement offers Accessories worth Rs. 20,000/- . Since the high end model does not require any accessories, no discount of Rs.20,000/- is offered in the high end model. Therefore the total benefits of Rs.1,00,000/- stands reduced by Rs.20,000/-. On discussion, the dealer offered at best the "mats". I cant believe the cost of mats is Rs. 20,000/-. 
c) Loyalty bonus of Rs.20,000/- is offered only if you have an existing vehicle of their make and produce a copy of RC and insurance. Therefore the benefits to non-company customers gets reduced by another Rs. 20,000/-. 
and the last but the most important among all proving to be not only the misleading but also unfair trade practice is:
d) Insurance at Re 1/- for 3 years (benefits up to Rs.47,000/-). The insurance is applicable if and only if the premium is paid. Payment of the premium is the pre-requisite to cover any risk. The advertisement states benefit upto Rs.47,000/- which means the company is paying premium from their side. Now the question comes whether the company is paying the premium from their margins or it is being charged from the customer by building up the price by the premium and then misleading the consumer as if there is no premium or the premium is just Re.1/-. The following points would be more relevant:

i) If the premium is paid out of the margins, it leads to believe that the company is having sufficient margins. When the company is prepared to pay premium to the insurance company, the company should offer that much cash discount as well if the consumer wants to purchase the vehicle without insurance. This is just a concept of fair trading. Now either the consumer is being misleaded or unfair trade practice is being resorted to by the company. Both way it is misleading for the consumers. Misleading in the sense that the consumers if being offered free insurance otherwise it is unfair trade practice in the sense that consumer is being denied of his right to choose or get benefit of No Claim Bonus assuming that the insurance is free and no money is being charged which will ultimately prove to be misleading. Hence this is unfair trade practice through the means of misleading.
ii) As a consumer having enough awareness to discuss on the deal, the company offered two prices: One with free insurance for three years having price of Rs. 4,70,845/- and for vehicle without insurance with a price of Rs. 4,40,916/- This price is when we are comparing exactly the same model without any change of the product i.e apple to apple comparison.  Now the question arises as to why two prices and why such a difference. When the insurance benefit has been shown as Rs. 47,000/- then why only a difference of Rs.30,000/- between the two vehicles i.e. one with insurance and another without insurance.  The theory of two prices is proving to be that the prices of the products are build up with the premium and is offered as free that means misleading the consumer. Then when the benefit arising out of the offer of free insurance is Rs. 47,000/- then why only a difference of Rs. 30,000/- or so as against Rs. 47,000/- 
iii) The dealer on further probing stated that they have two set of prices one with insurance and one without insurance. This again proves that such offers are with an intention of misleading the consumers by charging the price but offering as free. Due to lack of awareness and intent of unfair trade practices also being resorted to by the companies, the consumers having no claim bonus (NCB) will have to forego as he has been misleaded that it is free. 

iv) The dealer also stated having no tie up with PSU insurers that means there is some element of duping the consumer by misleading means and the private insurers being favored for some obvious gains.

Incidentally I have already brought out an article titled Are you really getting free insurance as offered by Automobile Companies in their advertisements
 on my blog the link of which is

Foregoing article proves that the advertised benefits of Rs. 1,00,000/- stands reduced by Rs. 67,000/- for those consumers who do not have any existing car of any make plus who do not have existing Chevrolet car and who wish to claim No Claim Bonus from their existing insurance policies plus they intend to buy high end models. 
 The last but not the least where this difference of Rs. 67,000/- is going?

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