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Smartphone brands stretch no-cost EMIs to 30 months as sales slide and prices climb
Samsung, Vivo, Xiaomi, Realme, Oppo and Nothing are stretching no-cost EMI tenures to as long as 30 months this festive season. Smartphone sales fell more than 12% from January to September while prices rose 30-35%, so brands absorb the interest cost.
The numbers
Figures from ET Small Business,
| Consumer finance share of smartphone sales this year: | 42-43% |
|---|---|
| Premium smartphones bought on EMIs: | more than 65% |
| Brand-borne interest cost on no-cost EMI: | 8-18% |
Also in the report
- EMI share of Flipkart mobile, appliance and electronics retail: about a third
Why it matters for the brand
With consumer finance at 42-43% of smartphone sales (about 35% last year) and brands absorbing 8-18% interest on no-cost EMIs stretched to 30 months, price the EMI subsidy into every promotion and push the brands for subvention support, because volume is now being bought with credit while sales are down over 12%.
What to track next
- Next quarterly finance share reading above 43% or back toward the ~35% of last year
- Any brand announcing list-price cuts or dropping its 30-month tenor option
- Lender or regulator statements on no-cost EMI disclosure or consumer-durable loan delinquencies
- Smartphone sales data showing whether the 12%+ decline narrows after the festive period
- Brand or retailer commentary on margin pressure from absorbed interest costs
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Samsung, Vivo, Xiaomi, Realme, Oppo and Nothing are likely to keep no-cost EMI offers in place, since pulling back first risks losing share while sales are down over 12%.
- Smaller brands such as Nothing and Realme may be the first to trim tenors or subvention, as absorbing 8-18% interest costs weighs harder on thinner margins.
- Consumer finance lenders are likely to tighten underwriting on longer-tenor phone loans if repayment stress appears, given finance now covers 42-43% of sales.
- Regulators may examine how 'no-cost' EMIs are advertised and whether the brand-absorbed interest cost is clearly disclosed to buyers.
- Buyers are likely to keep trading up on instalments instead of paying upfront, and to defer purchases when no-cost terms are withdrawn.
The source
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