[TusharK]

According to a media report, the Covid-19 pandemic and the resulting economic slowdown might force carmakers to reduce prices of BS6 vehicles closer to the BS4 models.



The BS6 emission norms came into effect from April 1, 2020. Upgrading the engines to meet the more stringent regulations meant, carmakers had to make huge investments. Therefore, a price hike was inevitable.

However, brands like Toyota, which started selling BS6-compliant cars from January onwards decided not to pass on the entire BS6 price increase to customers.

Further, Mahindra and Tata Motors are likely to give incentives on BS6 models to push sales once the lockdown is lifted.

The report suggests that 2-wheeler makers are likely to take a decision on price revision depending on how the situation evolves in the future.

Source

Link to Team-BHP News

[aniyo]

I do believe this will happen. Market economics at play. When there was a lot of demand all OEM raised prices on frivolous grounds and now they have been caught off guard.

I can't digest the fact that sub-4M SUV have crossed 15L on road. Even with inflation these prices are a good 15-20% above what should have been the correct price.

Entry level cars will take much longer to recover, I don't think the luxury cars will be hit too hard. 10-20L range will be interesting to watch.

[Nithesh_M]

On one side its possible that OEMs will reduce prices to kick start sales after this event. On the other hand, they're incurring losses in crores with production shutdown. They'd most definitely try to make up for the losses by hiking prices. The middle ground is prices remain unchanged which would be more believable than price cuts. Those who bought cars in the first 3 months would be mad at them if they dropped car prices to bs4 prices.

[himanshugoswami]

whether they cut or not, there will surely be discounts that come into play very soon for most models, except maybe the traditionally fast movers like the i20, dzire etc.

[Carpainter]

I don't think there will be price cut after lockdown as that would undermine the statement OEMs make about rising input cost and blah blah to increase price in the first place. What I believe is price cut or not, auto sector will remain in red for the next few quarters even if lockdown is fully lifted after second week of April this year. I think the market will take some time to recover from this abrupt shutdown and the negative sentiment is here to stay for some time now. So big ticket purchases like cars will be secondary for many people right now. In fact after the lockdown is lifted, no matter when, the economy will definitely take some time to normalize. So a lot of sectors will see negative growth in the coming days. Bringing down the price alone will not cut it if I'm not wrong.

[Eddy]

There are reports like this (Kotak: Consumers would prefer car ownership over public transport due to virus fears) on how consumers will now prefer private vehicles instead of using public transport and risking infection. If that does happen and the industry sees better days, the price ain't coming down.

[Vid6639]

I think we will see the resurgence of small cars vs the trend of people spending more on SUV's. Maruti and Hyundai will see lots of sales for their hatches and small sub4m SUV's.

I am also expecting manufacturers in the upper segment to launch lower speced cars to bring the entry point lower. I had mentioned on another thread that VW/Skoda could even look at a 1.5L TSI vs the 2.0L TSI for the Kodiaq, Passat and Superb to get people tempted at a lower price point.

My guess is people will be weary of loans and might go for more affordable cars with minimal or no loans. This means they will look at a segment lower than what they would usually look at.

[84.monsoon]

I feel the price reduction should happen to spur demand, but not at the cost of manufacturers and dealers. The Government should open the purse strings and reduce GST and road tax by 50% from existing levels. This will result in a reduction of 20% from on-road prices since currently, 40% of the on-road price goes into central and state government's kitty for cars over 4 M and over 1200 cc diesel engines.



This is not the time to worry about deficient this is the time to rebuild the economy spurred by government spending and subsidies that encourages consumption by public.

NOTE FROM SUPPORT - Please proof read your posts before submitting it.

[M00M]

Originally Posted by 84.monsoon

. The Government should open the purse strings and reduce GST and road tax by 50% from existing levels.

Hah. Wishful thinking. Will never happen. Rather taxes will go up due to economic situation thanks to COVID.

[CrAzY dRiVeR]

Reduction? I would say correction.

Many of the established products in the Indian market had become so expensive, riding on this market confidence! More than 14 lakhs for a Brezza with an age-old 4 speed AT and NA petrol engine? 19 lakhs for a Honda City? 30 lakhs for an Innova?

Regardless of the reason - be it the greed of manufacturers, excessive taxation, new government-mandated features - the price had risen a LOT in recent years. I'm looking forward to the post-COVID economic slowdown and the resultant reality check for manufacturers. Like Vid6639 rightly mentioned above, spending will reduce significantly due to the volatility of job markets. In fact, the lockdown is also changing the market psychology, at least for the short run, to be more value-conscious and to choose the essentials over snob value.

The only problem is that this trend will be short-lived. All will be forgotten within a year or two, buyers will be back to the same old purchase pattern - and the prices will rise to similar or higher levels once again. Maybe even higher, because the recent trends of shared and public mobility may struggle to gain momentum hereon!

If the health situation improves within a couple of months - the last stocks of 2020 could prove to be the biggest bargain in a long time.

[Turbanator]

Originally Posted by CrAzY dRiVeR

Reduction? More than 14 lakhs for a Brezza with an age-old 4 speed AT and NA petrol engine? 19 lakhs for a Honda City? 30 lakhs for an Innova?

be it the greed of manufacturers, excessive taxation, new government-mandated features - the price had risen a LOT in recent years.

Before blaming manufacturers, I will suggest we should see the Basic Invoice value (Ex-showroom minus the taxes/ RTO/ Insurance). In most states, the Government keeps as much as the manufacturer in taxes. Let’s take Toyota, which everyone thinks is milking, and consider an Innova - Diesel variants starts about 16 lac implying a Basic Price of Rs 10,5 Lac that goes to Toyota & rest all is Taxes - 50 % GST, RTO - 10-20 %, Insurance- 8-10 %. Manufacturers get Nothing from it. This all goes to the Government.

The basic value translates to about 14000 USD. Now, I will like to know of any Country where Toyota or any manufacturer sells such MUV Brand New at 15-K USD?

Problem is that no one feels for the middle class salaried guy who first pay 30 % Plus Income Tax and than so high taxes on something which is a need elsewhere but considered luxury here.

Going forward, it will be a double whammy for the manufacturers, USD is already 76 + and who knows what sort of taxes are increased. We don’t produce 100 % here and are dependent on lot of imports, all of which are going to cost more. Everyone agrees that there will be a lack of demand so what will the manufacturers do? They can reduce their margins or curtail the production and bring the prices (increase) to over their higher input costs. I see more of the later as the manufacturers have limited flexibility on their costs/ margins.

We will see prices of Kia, Toyota, Honda and all premium cars will be raised in coming months even if it means less business for them. There is no other option, remember, they produce to earn and not lose!

[GTO]

Originally Posted by TusharK

According to a media report, the Covid-19 pandemic and the resulting economic slowdown might force carmakers to reduce prices of BS6 vehicles closer to the BS4 models.

Once the market opens up, discounts are inevitable. Imagine the plight of dealers who still have December 2019 & January 2020 cars in their stockyard, or manufacturers who are holding February cars.

Some foolishly priced their BS6 cars too high (e.g. Jeep Compass), even though the actual cost wasn't so much. Plus, in a premium car like the Compass, there is more than enough profit room to absorb part of the cost.

Originally Posted by Eddy

There are reports like this (Kotak: Consumers would prefer car ownership over public transport due to virus fears) on how consumers will now prefer private vehicles instead of using public transport and risking infection.

IMHO, the "usage" of private cars will definitely shoot up and everyone will be scared of public places / buses / trains for another 6 months. That said, I'm thinking that "purchase" of new cars might not be that high as people will overall be tightening their belts. Me & my family have decided to stop all big ticket purchases for 1 year at the very minimum. I agree with Vid6639 too = entry level cars will suddenly look more tempting, as a segment overall.

[mroutlander]

I'd echo the thoughts of Vid6639 and GTO here. I'll go even as far as saying that people who can, will avoid public transport for at least 6-8 months (yeah, call it precaution or paranoia). This would in turn, not only spur the sales of cars from the A,B,B+ segments (as the gentlemen pointed out) but 2-wheelers as well (not everyone can afford a car). So, at these levels OEMs might offer discounts to encash customer sentiments. But C segment onwards, OEMs will be facing an imbroglio - can't take the risk of jacking up the prices because they are likely to find it difficult to entice customers that way. And then there is the botheration of piled up inventory (despite curtailed production). COVID-19 has to have a negative impact on input costs. They can't completely push those additional costs to the customer nor can they absorb them.

OT Epilogue : If the purchases of entry level cars pick up, it won't do any good to the already-congested Indian roads and the cumulative carbon footprint. We'll end up reversing the self-healing that Mother Nature has done within this lockdown period.