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Business – Confident auto makers now plan price hikes

Lijee Philip

MUMBAI: Even as car buyers are thronging leading showrooms in the past few days, car manufacturers are contemplating a 2-3% price hike in october.

While Toyota, General Motors are planning to hike prices, others like Hyundai and Maruti Suzuki are reviewing the situation. Others such as Honda are relaunching their brands such as City and Civic this month with a higher price tag.

Top industry officials confirmed the move on conditions of anonymity. “While we are feeling the pressure of rising input costs, we are currently reviewing the situation. We have been absorbing the rising input costs for a while,” said a senior Hyundai official, the country’s second largest car maker. Some of the car makers will increase prices of certain models within its range. We will look at increasing prices of certain models like Aveo and Optra. But we will not hike prices of our small car Spark for the moment,” said Ankush Aora of General Motors India.

Dealers and manufacturers expect a 10-15% growth in September and the momentum to continue in October as well, driven primarily by new launches, discounts and other incentives. With corporates announcing bonuses and increments and with the job market showing signs of revival in the recent weeks, consumers are encouraged to trade in their cars for new purchases, said a Mumbai-based car dealer. The availability of finance and liquidity have also improved demand among consumers.
Till recently the economic downturn and the global recessionary trends forced consumers to postpone new purchases. The car market, which saw double-digit growth for nearly five years in a row till 2006, showed signs of slowing down to single digit from January 2008. The domestic car market is seeing a revival of sorts from the past two months. Although sales are up, margins have been under pressure for most manufacturers forcing them to consider price hikes.

Analysts say that although the overall sales outlook is expected to be strong for the rest of the year, growth is expected to continue for the compact car segment as compared to the premium segment, especially after the festive period. In fact, some of the recent launches such as the Toyota Fortuner, Tata Nano, Maruti Suzuki Swift, and the Dzire continue to command a premium ranging from Rs 50,000 to Rs 1,00,000.”

Most car makers recorded a higher growth in August as compared to the corresponding month last year. Maruti Suzuki sold 69,961 cars in August up 29%, while Hyundai Motor sold 24,401 units up 13% and Tata Motors sold 17,364 units up 11%.


September 28, 2009 - Posted by | Uncategorized |

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