Carmakers at Odds with Price Hike Threats and Discount Schemes

Maruti Suzuki is offering discounts of up to Rs. 20,000 to 25,000 on the WagonR, Estilo, Ritz and SX4 range of cars while Hyundai India has taken it up a a notch and is offering benefits of up to Rs. 50,000. There are several other automakers who have similar discount or benefit schemes to lure customers into a sluggish market.

On the other face of this coin, these automakers are also engaged in their yearly battle of price hike threats to bring in customers and clear the old stock. Car makers are justifying this price hike threat by quoting pressure on operation margins. According to most car dealers, this scare tactic is used due to the slow demand in the month of December as most customers do not wish to purchase a vehicle as this is a period where car models are frequently updated or changed.

Car makers on the other hand put these measures down to economic effects and not public demand or intrest. Rakesh Srivastava, VP (marketing and sales) at Hyundai India, made a statement in tune with this theory, "Macro economic conditions have not been favourable this year. There is pressure on (operating) margins on account of low volume growth and increase in various costs. We are considering a price increase, the quantum and timing will be communicated once we finalise the details."  

[Source - ET]