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Car, two wheeler prices head north despite weak demand

Car, two-wheeler prices head north despite weak demand

Car, two-wheeler prices head north despite weak demand
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By CNBC-TV18 Jul 24, 2019 5:38:45 PM IST (Published)

Car and two-wheeler companies are hiking prices despite negative demand for eight straight months, thereby straining retail demand further.

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Companies say that the hike is necessary to offset input cost pressures, recover costs on account of new safety regulations as well as negate the hike in duties on imported parts as announced in the Union Budget.
The hikes comes at a time when discount on some models remain high. For instance a large-sized SUV such as the Honda CRV is sold with a consumer benefit offer of Rs 2.5 lakh, while the Toyota Corolla sedan can be bought with benefits of Rs 1.6 lakh.
Hyundai Motor India, the country’s second largest car maker, will raise prices by up to Rs 9,200 from August 1. The hike will come into effect on 10 of its models, including Santro and the Venue.
Domestic sales in June for Hyundai dipped 7.3 percent to 42,000 units compared to the same month last year. In May, domestic volumes declined six percent on the back of a 10 percent fall in April.
The continuous fall in sales comes despite addition of new models to the line-up such as Santro and Venue. Kona, the electric SUV, may have been spared as of now.
TVS Motor hikes prices
Chennai-based TVS Motor Company, which is India’s fourth largest two-wheeler maker, raised prices twice so far this fiscal. The hike comes despite an eight percent decline in domestic volumes in June on the back of a four percent dip in May.
KN Radhakrishan, President and CEO, TVS Motor Company, said, “Our price increase was to the tune of 0.1 percent in Q1. In July, we increased some prices, so put together, it will be 0.3 percent.”
A Mumbai-based dealer of Hero MotoCorp confirmed that prices are expected to rise in coming days. The company raised prices earlier this month by a percent.
Bajaj Auto didn't respond to queries.
... so does Mercedez-Benz
The luxury car industry is the worst hit by the slowdown, but that has not stopped the incumbents to look at a price hike.
India’s largest luxury car maker Mercedes-Benz has decided to hike prices by three percent on a select range by the first week of August.
“Factors comprising increase in custom duty on automotive parts, compounded by additional cess and excise duty on fuel, have led to a rise in input cost, which is exerting significant pressure on operations,” a company statement said.
The maker of E-Class and ML-Class cars reported 19 percent drop in volumes during the January-June period at 6,561 units as compared to 8,061 units sold in the same period last year.
From July 1, all cars are to be equipped with a driver-side airbag, speed warning system, a seat belt reminder for front passenger and driver and rear parking sensors as standard.
And from October 1, all cars will have to undergo crash test comprising full frontal, offset and side impact, which will make them road worthy. All these regulations will push up the end cost of the vehicle. Other manufacturers are expected to follow suit soon.
Besides there is the onset of Bharat Stage VI emission norms due to kick in on April 1, 2020. This will also push up prices substantially putting further pressure on retail demand.
Source: Moneycontrol
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