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In a market where many auto companies are faced with sluggish car sales and are offering discounts, Hyundai, the second largest player, has hiked prices by up to Rs 30,000, citing pressure from rising input costs.
The hike will come into effect next month on all models except the sports utility vehicle, Creta, launched early this week. More companies are expected to hike prices in the run-up to the festival season that begins in September.
The price increase is in the range of Rs 3,000 to Rs 30,000 a car, accounting for 1-2 per cent addition on the current price. “The company has not worked out finer details of the increase,” said Rakesh Srivastava, senior vice-president (sales and marketing), Hyundai India. He said the company was contemplating a hike for the last three months.
“We have been absorbing most of the costs but now we are constrained to consider the price increase in these challenging market environment,” he added. Even though Hyundai has a high degree of localisation (approximately 90 per cent), it imports transmission components, etc.
Hyundai reported domestic sales volume growth of 7 per cent in the April-June quarter of the current financial year, against a double-digit growth of 10.63 per cent same quarter last year. The company says it is confident of achieving a double digit growth this year too.
Asked if this hike will impact the volume growth, Srivastava said volume growth is not just dependent on price even though buyers are price sensitive. “A purchase decision is dependent largely on the value a product has to offer.” The July-September quarter is traditionally a high demand quarter for passenger vehicles due to the festive season in September-October. The demand offers companies legroom to hike prices.
Michael Mayer, director, Volkswagen Passenger Cars India, said last month: "India is an extremely price competitive market. We have not seen any price increase for two-three years. The market has not allowed. Buyer has been hesitant."
The industry’s sale of passenger vehicle in the April-June quarter grew over 6 per cent to 653,302 units, mainly driven by companies like Maruti and Hyundai. The June volume growth, however, was flat.
High interest rates and uncertainties in the rural economy due to projection of deficit monsoon are impacting growth. Only a few players like Maruti Suzuki, Hyundai, Tata Motors, Honda, Toyota, etc., have managed to grow. Sales of companies like Mahindra & Mahindra, Ford, General Motors and Nissan are on the decline.
The hike will come into effect next month on all models except the sports utility vehicle, Creta, launched early this week. More companies are expected to hike prices in the run-up to the festival season that begins in September.
The price increase is in the range of Rs 3,000 to Rs 30,000 a car, accounting for 1-2 per cent addition on the current price. “The company has not worked out finer details of the increase,” said Rakesh Srivastava, senior vice-president (sales and marketing), Hyundai India. He said the company was contemplating a hike for the last three months.
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“We have been absorbing most of the costs but now we are constrained to consider the price increase in these challenging market environment,” he added. Even though Hyundai has a high degree of localisation (approximately 90 per cent), it imports transmission components, etc.
Hyundai reported domestic sales volume growth of 7 per cent in the April-June quarter of the current financial year, against a double-digit growth of 10.63 per cent same quarter last year. The company says it is confident of achieving a double digit growth this year too.
Asked if this hike will impact the volume growth, Srivastava said volume growth is not just dependent on price even though buyers are price sensitive. “A purchase decision is dependent largely on the value a product has to offer.” The July-September quarter is traditionally a high demand quarter for passenger vehicles due to the festive season in September-October. The demand offers companies legroom to hike prices.
Michael Mayer, director, Volkswagen Passenger Cars India, said last month: "India is an extremely price competitive market. We have not seen any price increase for two-three years. The market has not allowed. Buyer has been hesitant."
The industry’s sale of passenger vehicle in the April-June quarter grew over 6 per cent to 653,302 units, mainly driven by companies like Maruti and Hyundai. The June volume growth, however, was flat.
High interest rates and uncertainties in the rural economy due to projection of deficit monsoon are impacting growth. Only a few players like Maruti Suzuki, Hyundai, Tata Motors, Honda, Toyota, etc., have managed to grow. Sales of companies like Mahindra & Mahindra, Ford, General Motors and Nissan are on the decline.
