[supremeBaleno]

There are 2 sides to the price cuts. Almost all products are initially sold at a premium to skim the market for the cream (the guys that want it first and do not mind paying a premium for it). Then the prices are brought down a bit to attract the other consumers. This would be OK with most buyers as long as the cuts are nominal and not very drastic.

The 2nd variety of cuts is those that are done to build up sales of a product that is not selling. Here the price cuts could be drastic and could destroy brand value and the confidence of the consumers that bought the car pre-price cuts. This was the case with both the Sonata and the Baleno - the reason for price cuts was due to the cars not finding favour with the buyers.

However, the difference was that in the case of Sonata, the price cut happened within a year or so of the product's intro in the market, which badly hurts the guys that bought it initially. With the Baleno, the car was launched here in 1999 and the discounts happened many years later, which would not have really hurt the initial buyers confidence. However, there would have been a dent to the brand value of the Baleno, which would haunt the MUL guys while they try to fix the pricing for the new Baleno.