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May 17, 2001
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Money > Business Headlines > Report May 17, 2001 |
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Latest price hikes not to affect car salesNetScribes / Mahesh Shetty The latest round of price hikes in the passenger car segment is not expected to dampen potential sales. The consensus across a cross-section of analysts, car industry insiders and auto dealers is that the increase has been nominal, and more importantly, it will not stretch the demand elasticity enough to matter. "I would say buyers have been anticipating this for some time now. So there isn't even any surprise element," said a large multi-brand dealer in Bombay. "Despite the fact that we're a price sensitive market, when it comes to an incremental hike, that too across manufacturers, the buyers are okay with it." Dealers are, in fact, expecting a temporary surge in demand over the next few days as buyers try to get in last minute purchases just before the price hikes come into effect. "Essentially, our market is built such that the buyer doesn't think too much about a Rs 5,000 increase (the average hike in small car prices this time) if everybody does it," said an analyst at a leading brokerage in Bombya. This indicates that on a product like autos, a buyer, even at the pre-decision stage, will not attach too large a weight to an increase of this magnitude. Number one player Maruti Udyog announced earlier this week that it was hiking prices, and at least a couple of other car makers have followed suit. Daewoo is hiking prices on its small car Matiz by Rs 5,000-7,000 from June 1. Madras-based Hyundai is also reviewing the prices of the Santro and Accent. Maruti increased prices on most of its models by up to 1.5 per cent, while raising the warranty period on all its cars to 2 years. The company has hiked prices on the Maruti 800, Omni, Zen (petrol), Alto and Wagon-R. The prices of the Esteem, Baleno and Zen (diesel) have been left untouched. Analysts believe that this is because of their performance on the sales charts, ranging from defensive sales of the Esteem to disappointing sales of the Zen (diesel) and Baleno. |
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