Car companies producing passenger cars for the Indian market offered hefty discounts ranging from Rs. 60,000 to Rs. 70,000 during the last month of 2011 to pull maximum buyers. The car makers were forced to cut down on the purchasing cost of their vehicles in order to survive the slowdown. However, as soon as the year 2011 ended, each and every car company is ready with increased prices for their vehicles.
Both Indian as well as multinational car manufacturers have confirmed a price hike of up to 3 per cent with effect from 1st January 2012. As usual, the month of December saw car makers selling their products at huge rebates in order to clear-off the stock. However, this time, the discounts offered by car companies were higher as most passenger cars could not attract sufficient volume of buyers due to high fuel prices and unaffordable interests on loans.
Thus, in view of the advantage of New Year, wherein buyers are ready to pay extra money, companies find price hike as the best and most apt option to compensate for their earlier performances. Of late, the falling value of rupee has made things worse for the auto companies as importing of components have become more expensive.
Utility vehicle manufacturer Mahindra & Mahindra has announced an increase in the price of its vehicles by up to 3 per cent. The company has also decided to raise the purchasing cost of its XUV500 sports utility vehicle (SUV) to the tune of Rs. 50,000-55,000 from the start of 2012.
"This price rise has been necessitated as the launch price was an introductory invitation price and there has also been a considerable impact of increase in raw material costs and the rupee depreciation with respect to dollar & euro," M&M said.
However, the company also said that buyers who have already fulfilled the formalities for booking the car but have not yet been delivered with one, will pay only half of the additional amount.
India's second largest passenger car company, Hyundai Motor India Limited is set to increase the prices of its cars by 1.5-2 per cent whereas Toyota Kirloskar Motor has decided to hike prices by 1.5-3 per cent. Ford India will also increase the cost of its vehicles by 2-3 per cent.
"To make up for the losses incurred due to discount offers and inflationary pressures resulting in sharp rise in lending rates for car loans by banks, the Indian auto makers are all ready to hike prices of their passenger cars by one to nearly 10 per cent in the first half of the next year," said D.S. Rawat, Secretary General, Associated Chambers of Commerce and Industry of India.
With the start of New Year, buyers will have to pay more for purchasing vehicles, at least during the initial phases of 2012. However, car companies may bring some relief to the customers as a wide range of vehicles would be made available to them.
