Bajaj Auto and TVS Motor Co, for instance, have rolled out the product in parts of Maharashtra and south India. Hero MotoCorp is offering the discounted rate in parts of Uttar Pradesh and other rural pockets in north India, interactions with dealers revealed.

Arya Sen, an analyst at Jefferies, who did a dealer channel check late last month, said the cost of the zero-interest loans would likely be borne by the OEMs. “Multiple dealers highlighted that cash sales have been particularly weak. Many two-wheeler OEMs have indicated a sharp increase in share of financing from 30-35% around 18 months back to 40-50% currently,” Sen said.

Dealers said this is the first time,in many years, that manufacturers are subsidising sales to this extent. Apart from discounted loans, other offerings like cash discounts and freebies on accessories continue. When contacted, all the three companies declined to comment.

Sanjay Bhan, Head of sales, Hero MotoCorp, had told analysts post the Q1FY20 results that the company is working on ways to give consumers more financing options. “Availability of finance has become critical in urban centres, because of the NBFC liquidity issue and the footprint of finance in the rural market is another challenge. We are trying to tackle both and make sure customers get to buy,” Bhan had told analysts.

Two-wheeler volume growth slowed down to 4.86% in FY19 against a near 15% growth in FY18. In Q1FY20, volumes fell 12% year-on-year (y-o-y).

In FY19, scooter sales fell 0.27% against a growth 20% in FY18. Motorcycle volumes, on the other hand grew 7.76% in FY19 compared to 14% in FY18. In Q1FY20, scooter sales fell 17% y-o-y, while motorcycles declined 9% y-o-y.

Rajiv Bajaj, managing director at Bajaj Auto, recently said on a television channel that he did not see any green shoots. “I don’t see any green shoots yet. The hike in insurance premiums of about `5,000 in September last year proved to be almost the tipping point for an industry that was doing well,” Bajaj said. Analysts said despite production cuts, channel inventory is still high for all the OEMs. “Our industry interactions lead us to believe that retail demand has also declined sharply and inventory levels have not come down from the elevated levels,” analysts at Nomura said.