The Telegraph
Thursday , October 4 , 2012
Since 1st March, 1999
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Dichotomy in car sale tactics

New Delhi, Oct. 3: Car makers are jacking up prices to offset the impact of rising input costs and fluctuating foreign exchange rates even as they offer discounts and incentives to clear their old stock.

Maruti Suzuki today raised prices of all its models by Rs 2,500-5,250, while Honda Cars India hiked the prices of the Brio, City and Jazz up to 2.6 per cent from October 1.

However, both Maruti and Honda are offering discounts of up to Rs 35,000 and Rs 50,000, respectively, on the petrol version of various models. A rise in the demand for diesel cars has led to a sharp fall in the sale of petrol models.

Premium car maker Audi, which recently hiked the price of its compact sports utility vehicle Q3 by 2 per cent, today said it was considering a plan to raise the prices of its entire range after the festive season.

Earlier this week, utility and commercial vehicle manufacturer Mahindra & Mahindra announced plans to raise prices by 0.5-1.5 per cent. Last week, General Motors India said it was evaluating a hike.

Analysts said these were pressure tactics to ensure customers did not delay buying decisions. Moreover, most discounts and exchange incentives are on older inventories.

“Companies are hiking prices on new units, while older units will be sold at discounts ensuring that inventories keep moving. Such marketing tactics are common in a slow demand market,” a senior analyst said.

Car makers are resorting to these tactics to push demand at a time sales continue to sag, with seven of the country’s leading manufacturers together posting a 0.6 per cent growth at 192,424 units last month.

Maruti is offering a discount of Rs 30,000-35,000 on the petrol variants of the Alto, WagonR, A-Star and the Estilo. These include cash discounts and free accessories.

Honda India is offering discounts of up to Rs 50,000 on all petrol models. The Brio compact has an incentive between Rs 15,000 and Rs 40,000, which includes free insurance and a cash discount, while the City sedan carries benefits of up to Rs 35,000.