Price hikes: Auto companies in wait & watch mode [India Business] [Times of India]
(Times of India Via Acquire Media NewsEdge) CHENNAI: In March, everyone was talking about price hikes come April. But now, except for a handful, most car companies are in 'wait and watch' mode. Top mass market brands like Maruti, Hyundai, Ford, Toyota, General Motors and Mercedes Benz are all holding their price lines for now. Reason: sluggish demand and a market that's refusing to perk up despite the excise duty reduction.
"We continue to monitor indicators and trends," said the Ford India spokesperson.
"We have no plans (for a price hike) as of now," said a statement from Toyota.
"Mercedes-Benz has already taken various pricing measures this year to maintain profitable growth. We are not planning any further price increase in the near future," said the statement from Mercedes Benz.
"We are not planning anything at the moment because the market condition is not too good," said a Hyundai Motor India source.
"How can we raise prices when the market is in such a state," said P Balendran, GM India spokesman.
Even market leader Maruti is not thinking of a mark up right now because of the sluggish demand, despite the "pressure on margins".
Auto analysts say although April and January price hikes have now become de rigueur in the auto industry, this time the situation is different. "The government has just reduced excise duties and raising prices now will seem very odd," said the head of marketing of a mass market auto company. Also no one expected demand to remain so flat despite the excise duty slash. "Cars are not selling, so no one has the gumption to go for a hike," said another senior marketer. "The March pronouncements were just formality."
Of course, some companies have gone ahead and taken small price increases. Audi on Thursday announced a 3% price markup effective May 1. "The overall market scenario has remained challenging with the constant fluctuation in forex rate thus resulting in a rise in input and operational costs. To address this, we have rationalized prices, but have ensured that the impact is as minimal as possible," said Joe King, head, Audi India.
M&M sources also said the company had already taken a small price increase while Honda has hiked prices on its higher end City variants by 3,000-11,000. Car companies say the rupee fluctuation and rising input costs is putting pressure on margins. Hence they have been looking at small mark-ups but at current market conditions even those are difficult to pass on to the consumer.
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