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Carmakers revise prices, incite advance buys

by ET Posted on 20 Nov 20124,505 Views Comments

Carmakers Maruti, Hyundai, Honda and others go for price revisions to incite advance buys from consumers


Toyota Etios



Buoyed by strong festive sales, carmakers have again created the hubbub of price hikes to increase showroom traffic and gain traction in a slowing market.


While most manufacturers blame perennial factors like rising input costs and the adverse impact of foreign exchange fluctuation, marketing experts say that announcements of price hikes are often strategic gambits to woo buyers to showrooms before the increase actually comes into effect.


"A higher price would persuade any potential customer to advance his purchase for a better bargain at older prices. It also helps in getting rid of older inventory, although with every such hike carmakers run the risk of their sales and market share getting hit in the long term," reckons Pradeep Saxena, senior vice president at market research firm's TNS Automotive.


The first off the starting grid in this round of price hikes is German luxury carmaker Audi, which has announced an average 5% increase that will be effective from the New Year; the carmaker did not share the exact revised price tags for the sedans and SUVs.


At current prices, the range starts from Rs 27.5 lakh (ex-showroom Delhi) and goes up to Rs 1.3 crore.


Michael Perschke, head Audi India, maintains that although market conditions are tough, a price hike is inevitable. "The overall market scenario is challenging.


The rise in input costs, a depreciating rupee as well as continuous increase in fuel prices have made us re-evaluate our pricing strategy in India and increase prices across the entire range. However, we are offering customers customised and innovative finance options from Audi Finance."


Paradoxically, the revised price tags come at a time when discounts are also running on a three-year high. Sluggish demand conditions have forced most carmakers, including Audi, to discount prices and offer freebies. The German automaker's vehicles carry discounts running up to Rs 2.5 lakh to Rs 4 lakh on the on-road price.


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