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Impending price hike drives auto showroom footfalls

Source : BUSINESS_STANDARD
Last Updated: Sat, Dec 08, 2012 18:50 hrs

pDecember is the month when car makers offer discounts to clear inventories This year it is coupled with announcements of price hikes come January Will the dual effect of discounts and impending price rises bring the customer back to showroomsppWell dealers say footfall and inquiries overall have increased by around 20-25 per cent compared with last month but they are not expecting a bonanza in terms of salesppCar makers are offering December discounts in the range of Rs 15000 to Rs 15 lakh in the form of cash benefits exchange offers accessories and extended warranty Hyundai Motor India Ltd has rolled out December Delight where one can save up to Rs 50000 while Tata Motors Ltd is offering the Ultimate December Offer across models with savings in the range of Rs 25000 to Rs 15 lakh Ford India Pvt Ltd recently had a midnight sale 8 am to midnight with discounts up to Rs 81000pp"Traditionally November and December are low months with the festivals over People usually wait for new models and also for a new year registration for their car to ensure higher re-sale values One encouragement for them to come back to showrooms is discounts" says P Balendran vice-president corporate affairs General Motors India Pvt Ltd While currency fluctuations and rising input costs have put margins of car makers under pressure no one could raise prices during the festive season he added "Also since November-December are low months no one would wish to raise prices now So all price hikes are lined up for January&rdquoppGeneral Motors would raise prices by one-to-three per cent from January "The actual impact on sales can be ascertained after some time but footfalls have already picked up" Balendran saidppMost major car makers have announced price rises come January Maruti is set to raise prices by up to Rs 20000 While Hyundai is yet to announce a price rise dealers say there might be an increase of 15 to two per cent across models Utility vehicles major Mahindra and Mahindra Ltd which has started advertising its December discount offers to pull customers is also likely to raise prices by up to three per cent say dealers Toyota Kirloskar Motors Pvt Ltd is also mulling price increases by 1-15 per cent across modelspp"Price rise is necessary as there has been significant pressure on the margins due to currency fluctuations" said a a senior official of Maruti Suzuki India Ltd requesting anonymity As an Angel Broking report highlighted &ldquoWe expect the price increase to slightly offset the negative impact of foreign exchange movement on the operating margins of the company"ppA city-based Toyota dealer said that come January prices of Fortuner the company&rsquos premium sports utility vehicle would be increased by Rs 50000 while Innova prices could be raised by around Rs 30000 Even prices of Etios sedan and Liva hatchback models can rise by Rs 15000pp"The quantum of hikes by most car makers is not clear yet As for Maruti it has said it would raise prices by up to Rs 20000 and considering that the average price across its models is around Rs 4 lakh the rise is as steep as four-five per cent But the Rs 20000 rise can only happen in the case of more expensive models So the uncertainty is definitely going to bring back customers to the showrooms" said Yaresh Kothari an auto analyst with Angel BrokingppPeople usually tend to prepone their purchases before the annual budget in February-March lest there are excise duty hikes announced "Now this year with impending price hikes in January customers might decide to take their buying decision in December itself however it&rsquos still difficult to say how strong the pull of discounts and threat of price hikes would be Definitely compared to the current environment there would be some boost" Kothari saidppConsumer sentiments are low at this time mainly because of high fuel prices and interest rates Eight of the country&rsquos leading auto makers posted a meagre 37 per cent growth during November the Diwali month by selling 194882 unitsppAccording to a Society of Indian Automobile Manufacturers release "Passenger vehicles segment grew at 1053 percent during April-October 2012 over same period last year Passenger cars grew 284 percent utility vehicles grew 6054 percent and vans grew -085 percent during April-October as compared to same period last year"p

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