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Old 12th January 2010, 14:29   #1
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Default GM reduces discount on Chevy Spark by 20,000

General Motors hiked the price for its best seller –Chevy Spark by 20,000 in 2010. More precisely they reduced the discount from 47K to 27K. Thus for on-road, a new customer has to pay more than 22K than a car bought in 2009.

I don’t comment that a hike of 20K is too big, but it is really a big hike in the segment in which the car is positioned. GM could have increased it in a phase by phase manner than a steep hike.

Last year GM sold more than 40,000 units of Spark and was experiencing a steady growth month by month. Importantly the sales figures for last three quarters kept consistency. More than GM or Chevy brand, people perceive Spark as a value for money hatchback with good quality and styling. With this hike, gradually it’s shifting from the VFM domain to an entry level premium domain, already having enough players.

The base version of Chevy Beat (with AC, Power Steering & body colored bumpers) is available at 3.87 on road (Chennai) while the LS version of Spark is more than 3.7L and LT version around 4L.Naturally people can easily shift to the recently introduced Beat or any other cars like i10, Estillo and cars up to Swift. Somebody who spend 4L is mentally prepared to stretch 50K more to buy a much bigger, reliable and powerful 1.2Litre hatch or an entry level sedan.

Competitor Strategy

Maruti – Even though Maruti was almost skimming the market in B segment all these years, today they have an aggressive pricing strategy. They are planning to reduce the price for many of their models like Alto, Swift and Wagon R. Already they slashed the prices for Estillo. Then in pricing aspect, Spark is losing its credibility and has to compete directly with cars like Wagon R, Estillo, Alto and Swift.

Hyundai – Now Spark LT is more expensive that Santro and the Era version of i10 (after discounts). Moreover Hyundai dealers are ready to give much better offers (in price as well as accessories) than GM dealers who cling to the 27K discounts offered by the company (as per my experience in Chennai). Hence the total cost of ownership (even though they are not offering 3 years maintenance pack) will be almost equal to an i10.

Tata – Now Petrol version of Indica is cheaper than Spark and Indica Vista is also a much VFM car which can compete in Indian Market Scenario. Also I am sure that a small number of prospects who consider Spark LT will consider Indigo CS also, which is also competitively priced.

Ford Figo & Vokswagen Polo even though not a direct competitors, may catch up some portion of Spark sales, especially the high end version (LT). The drift in decision making may go as follows:

Chevy Spark ---> Chevy Beat ----> Maruti Swift / i10 / Ford Figo / VW Polo

There is an emotional aspect which have more weight-age in this scenario than the additional amount spent. Those who bought a Spark few days before i.e. in Dec 2009 got much better value while people who buying the same product in January has to pay a premium for nothing.

I may be wrong, but the market will answer in upcoming months– Whether a sudden hike in a price sensitive market, especially in a price sensitive segment is a right move?

Last edited by sunil8089 : 12th January 2010 at 14:33.
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Old 12th January 2010, 14:42   #2
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good insight and good comparision.thanks for the info.you are right. when people can have the trusted,peppy car i10 why will they go for spark/beat.another 30-50K they can get Swift.
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Old 12th January 2010, 15:52   #3
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good analysis, Sunil.
Especially without the maintenance plan and now this price hike, buyers might lean towards Maruti and Hyundai products due to perceived easy maintenance of cars from these companies.
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Old 12th January 2010, 16:04   #4
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Quote:
Originally Posted by gomzi View Post
good analysis, Sunil.
Especially without the maintenance plan and now this price hike, buyers might lean towards Maruti and Hyundai products due to perceived easy maintenance of cars from these companies.
Thanks Gomzi, GM is continuing the three years maintenance plan in 2010.
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Old 12th January 2010, 16:05   #5
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Perhaps this is the first time that I am hearing of a price hike for GM products. I have seen sticker price increases, but effective price decreases. Perhaps a change of management (US govt. owned), Spark recovery has caused this.

Anyway if this price rise can be sustained, it is good news for existing GM Spark owners, and a new chapter in GM India's history. We GM owners have always felt ripped at paying x amount now, with someone else paying x-50,000 some 3-4 months thereafter.
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Old 12th January 2010, 17:09   #6
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Its plain and simple, they want to divert their customers to the new Beat. Even with the 20k increase the Spark LS can still be bought for about 3.5 to 3.6 on road atleast here in Navi Mumbai so its still sheaper than a lot of cars and does not touch the emotional 4 lac barrier yet.
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Old 12th January 2010, 18:26   #7
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Sounds good to me. I recently brought home a pre owned Spark LS for my Dad which was previously owned by another employee of my company under company car scheme and now allotted to me after lucky draw.

The car is in a good condition and is a Sep 07 model with 26K kms onboard. I got it at written down value of Rs. 1.67L. Had to renew insurance, got it serviced at A.S.C with replacement of a broken tail light, got both rear shockers changed under warranty and got a new tyre as one rear tyre was gone due to kaput shocker and got a new battery.

So an increase in price by Rs. 20K makes my deal little more lucrative.

Last edited by WanderNomad : 12th January 2010 at 18:33.
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Old 13th January 2010, 11:09   #8
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Update : The current discount offered for Spark is as follows:

Petrol - Rs.27,000.00

LPG - Rs.22,000.00
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Old 13th January 2010, 11:15   #9
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that's weird- i would have thought that with the launch of the beat at a price point that overlaps with the Spark, GM would take the Spark a bit lower and position it as a better (and slightly more expensive) alternative to the Alto.
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Old 13th January 2010, 11:54   #10
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The thread title is misleading. the price has not been increased, but the discounts reduced.

The latest price list retails spark with AC at 3,09,000 ex-showroom Delhi, less discount of 27K retails at 2,82,000. So can the title be edited?
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Old 13th January 2010, 11:59   #11
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More than often in a new year discounts go down (Compared to year end discounts). I think there is nothing wrong in it. However this must have been done strategically, to divert the customers to newly launched Beat.
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Old 13th January 2010, 13:14   #12
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I think GM was actually waiting for a timing like this. The chevy's brand Spark seems to be a huge hit. I see so many of them on roads in here, Italy.

With the increasing sales of SPARK, GM would have thought its right time to reduce the discounts.

Or they don't want to take a beat for the BEAT

I think there was news all over about price hike by major players in the beginning of 2010 right?
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Old 13th January 2010, 13:27   #13
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Every year car owners give more discount during December to increase the year end sales. But it is usual that they reduce the discount/offer amount during January which is common with all car manufacturers!So simply GM has reduced the discount offer from 47k to 27k and ofcourse the new buyer are losing this 20k discount however can this be called as official price increase by the company?
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Old 13th January 2010, 13:36   #14
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This is quite a confusing strategy that GM has adopted. I was expecting prices of the Spark to reduce even further so as to give enough room between itself & the recently launched Beat. This pricing might just end up hurting both the cars in terms of Sales.
There are quite a few people out there who might just prefer a higher version of the Spark than a lower version of the Beat. Also not all of us might be willing to stretch our budget by 50K just for a recently launched model.
We are a minority community as compared to all the people who buy cars out there. Many might consider it wise to buy a Spark & still have some cash left in hand.
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Old 13th January 2010, 13:43   #15
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Some comments on this thread is GM is killing Spark to get some sales of Beat. Unlikely. They have increased the price seeing increase in demand for Spark. Now have they dug their own grave. I think yes. With lot of new small cars coming in the fray and Maruti reducing the price of their small cars GM will loose market share in small cars in 2010.
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