News Hour- Car companies like Maruti Suzuki, Hyundai Motor & Volkswagen skip price hike on dipping demand

NEW DELHI: For the first time in 15 years, carmakers such as Maruti Suzuki, Hyundai Motor and Volkswagen have skipped their customary price hikes in January on constantly falling demand, giving customers a rare opportunity to buy new models at last year's price. 

From a high of 2.18 lakh units sold in September to a mere 1.59 lakh cars last December, sales have dipped alarmingly over the last four months despite a slew of discounts and freebies, putting the companies in a catch-22 situation. 

While a steady rise in input costs and rupeedepreciation over the last few months have put enormous pressure on their already squeezed margins, any further hike would deter potential buyers and add to the already gloomy market conditions. 

"We would be increasing prices soon, but a final decision is yet to be taken," says Maruti Suzuki managing executive officer (marketing & sales) Mayank Pareek. 

Toyota Kirloskar Motors too is yet to take a final call on price hike. "The change in price is expected in the next few days," said a senior executive of Bangalore-based Toyota Kirloskar Motors, declining to mention the time when the auto major would bite the bullet. 

Last December, carmakers announced a price hike of up to 1 lakh, to be applicable from January 1, hoping buyers to lap up new models and push up year-end sales. However, their gambit failed to lure customers. 

"Carmakers are under pressure," says Abdul Majeed, partner automotive practice PricewaterhouseCoopers. Footfalls have been falling and sales have now become very model specific, adds Majeed. 

"For instance, while Maruti is selling its Swift hatchback in good numbers, its other flagship models such as Alto and WagonR are reporting sluggish sales." Ditto for second-largest carmaker in India Hyundai Motor, which has seen an uptick in its Verna sales, but a fall in i10 and other models, adds Majeed. 

However, trouble for carmakers is an opportunity for potential car buyers as analysts predict high discounts, a hallmark of auto segment last year, to continue in 2012 as well. 

"Well, this is perhaps the best time to buy cars as New Year models are available at last year's price," said a Mumbai-based analyst working with an international consultancy firm. 

In fact, there's more in store for buyers. Most of the cars launched at the recently-concluded Auto Expo in New Delhi have been launched at an introductory lower price. 
(Source- http://economictimes.indiatimes.com)