Pune: Luxury and mass market car and two-wheeler manufacturers are hiking prices despite slowdown in demand for eight straight months in Asia’s third biggest economy, which could further strain retail demand.
Auto makers say price rise has been necessitated to offset input cost pressures, recover costs on account of new safety regulations as well as hike in duties on imported parts in the budget.
Interestingly, the price hike comes at a time when tempting discount on some models continue to bring down the high inventory level at dealerships with buyers postponing buying vehicles.
For instance, Mercedes-Benz GLC SUV and its flagship sedan, the S-Class is available for a discount of about Rs 7.50 lakh to upto Rs 12.80 lakh respectively.
Similarly, dealers are offering other large-sized SUVs such as the Honda CRV discount and benefits upto Rs 2.50 lakh and some models from the Toyota brand up to Rs 1.6 lakh-Rs 2 lakh.
Sales at India’s biggest German luxury car maker Mercedes-Benz in Jan-June 2019 period dropped by a whopping 18.60 per cent to 6,561 cars, down from 8,061 units it sold last year. It sales were hit by the slowdown and high cost of ownership, among other factors, but that has not stopped it from raising prices.
The Pune-headquartered auto maker on Wednesday hiked prices by three per cent on a select range of its models from the first week of August. Mercedes sedans and SUVS will now cost Rs 90,000 to Rs 5.50 lakh more at the showroom.
“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,” Mercedes-Benz said in a statement.
Martin Schwenk, MD & CEO at Mercedes-Benz India said a hike in custom duty on automotive parts, compounded by an increase in excise duty and cess on fuel have had a significant impact on our bottom line.
“We were left with fewer options, but to make some necessary price adjustments to our product range at the moment to offset the impact of the rising input costs,” Schwenk said.
Hyundai Motor, the second largest car maker, has also raised prices by up to Rs 9,200 from August 1. The hike will come into effect on 10 models, including Santro, Grand i10, Xcent, Verna, Creta and Tucson, among others.
Its June sales dipped 7.3 per cent to 42,000 units compared to the same month last year. In May, its sales volumes declined six per cent on the back of a 10 percent fall in April.
Honda Cars, the fourth largest car maker, also raised prices of its models by 1 per cent, ranging from Rs 4,500 to Rs 20,000 on some models such as Amaze, Jazz and City.
Two-wheeler giant, Hero MotoCorp has also increased prices of its motorcycles and scooters by 1 per cent with immediate effect on July 8.
Similarly, the Chennai-based TVS Motor, the fourth largest two-wheeler maker, also raised prices twice so far this fiscal. The hike comes despite an 8 per cent decline in domestic volumes in June on the back of a 4 per cent dip in May. The firm increased prices to the tune of 0.3 per cent this fiscal.