Is car price hike in Jan a ploy to sell more in Dec?

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New Delhi, Dec 6: Is the automobile industry looking to increase sales this month with announcements of price hike from next month? Most of the companies reported decline in car sales in the last three months despite festive season extending till middle of last month.

The increase quantum is mostly an adjustment to inflation and import costs and the auto manufacturers cannot afford to up prices substantially. The car companies have said increasing pressure on their margins due to currency fluctuation necessitated the move.

Maruti Suzuki India (MSI) has said it will increase prices of its products by up to Rs 20,000 and Toyota Kirloskar Motor said it will also hike prices by 1-2 per cent across all models. BMW India had in November announced increase of nearly 10 per cent, effective January next.


Other companies, Honda Cars India and Volkswagen India said they are also contemplating such a move but details are being worked out.

"There will be a hike in the prices of our products. Quantum will vary depending on models, but it can be up to Rs 20,000," Maruti Suzuki India Chief Operating Officer (Marketing & Sales) Mayank Pareek told media.

He said the price hike has been necessitated due to increasing pressure on the margins due to the currency fluctuation.

Toyota Kirloskar said it would increase prices across its models from Jan 1. The range will be 1-2 per cent across all models, a TKM spokesperson said.

Honda Cars India also said it is considering price hikes but details are yet to be finalised.

Similarly, a spokesperson for Volkswagen Group Sales India said, "With increasing pressure on input costs and exchange rates, Volkswagen is considering a price hike."

The sector recorded a sharp decline in sales except for Maruti Suzuki, Mahindra and Mahindra and Honda. Hyundai, Tata, Toyota and Ford found the going much tougher. Hyundai registered almost a flat month while Tata saw a steep 35% decline in sales.

"The adverse market conditions due to high interest rates and inflation continued to pose challenges for growth," said Rakesh Srivastava, vice president, marketing and sales, Hyundai Motor India Ltd.

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