Car price hikes of 1 - 2% in the last month - What's the reason?

samm · 27th July 2022, 19:16

Quote:

Originally Posted by Durango Dude

...Read some where that for every Fortuner sold Govt makes Rs 18 lakhs in taxes, dealer makes Rs 1 lakh and Toyota makes around Rs. 40000 to 1 lakh, now you decide who is looting whom! ....

Thats just one side of the story!

To plonk the 47L of after tax income, the person would have paid another 30L as income tax!

Attached the screenshot of the split of the 47L from the original source.

anandhsub · 28th July 2022, 07:12

No producer sells goods based on what their cost of production is. It is always based on what the market is willing to pay. So "falling" rupee ( how many manufacturers import stuff from the US to be impacted by a stronger USD?), higher commodity prices aren't really the reason. If the demand weren't there the manufacturers would just eat the cost increase into their margins like they did in 2010-13.

It is mainly the massive increase in salaries during covid of the IT sector ( we have an entire thread that discusses this) and its direct and indirect impact on salaries of other parts of the economy that's causing the price rise. Add to it were the extremely low interest rates that were in effect until March this year.

As interest rates go up and the job boom stabilizes the demand will come down and then we could see discounts emerging again.

kovilkalai · 28th July 2022, 08:26

Why should the government intervene in car prices? It is a want, not a need. Let free market principles apply. Every time someone raises prices, we don't have to run to the government for help. Auto company margins are in the single digits even with the price increases. They are companies with a profit motive and it is perfectly alright for them to increase prices. By this logic we should cap IT company billing rates (because their margins are much higher) and prices of other goods as well.

srikanth.vemuri · 28th July 2022, 08:56

As in this thread, even the thought of government involvement takes the focus away from the business aspects. Best that the government not intervene in pricing decisions, particularly for non-essential goods like cars.

Coming back to the topic of rising prices, as others here mentioned, it could chiefly be due to the market forces/ supply-demand mismatches throughout the chain, including the last link of carmakers (or used car sellers) and customers. It is a cyclical industry, hence expect it to revert after a while. Best to sit tight (as a buyer) if you can afford to wait.

Turbanator · 31st July 2022, 15:34

Mod Note - Please do not post anything about your Political views. In case any relevant posts have been edited/ deleted, kindly repost. Thanks for understanding.

Kapany · 31st July 2022, 16:46

Was speaking to someone at MnM and heard of another potential hike on the Thar.
I wonder if in some days we wished it was only a 1-2% hike!

Also, kudos to the mod team for removing problematic posts. Always good to discuss cars on a car forum.

jetsetgo08 · 31st July 2022, 19:11

Manufacturers are now making money of whatever little they lost during the lows of severe pandemic. Also, saving moolah for the speculated tough times ahead.

Prices of new cars may stabilize in a few months time, but that's about it. There would be slight increase in the ex-showroom prices which could potentially be followed by discounts. Then again, it would be a typical scenario of buy at Rs.Y today or buy at Rs.(Y+30k) followed by 30k discount.

However, to someone looking for a used car, there could be a huge correction in the used car prices in the next one year, once the demand for cars saturates. The current peak in demand despite soaring fuel prices, is due to a combination of need of (non-public transport) mobility and you live only once lifestyle.

RedMaw · 31st July 2022, 22:13

Make hay while the sun shines. Its just business 101 but as a consumer, we are helpless. Car manufacturing is very costly process. A single platform might cost 1000s of crore for development and couple of failed launches might sink a company. It has happened time and again. Even most successful car company in the world, Toyota has just 1/3 of its operating expanse as cash on hand on the other hand Apple has more than 1.5 years worth of operating expense as cash on hand. All this says, even with increased price and continuous successful product launches, car companies are always on thin ice, on the edge of survival. Its no wonder, car companies are raising prices like crazy to cushion themselves for the upcoming recession.

28th July 2022, 07:12	#17
anandhsub BHPian Join Date: Oct 2019 Location: Bangalore Posts: 585 Thanked: 1,533 Times	Re: Car price hikes of 1 - 2% in the last month - What's the reason? No producer sells goods based on what their cost of production is. It is always based on what the market is willing to pay. So "falling" rupee ( how many manufacturers import stuff from the US to be impacted by a stronger USD?), higher commodity prices aren't really the reason. If the demand weren't there the manufacturers would just eat the cost increase into their margins like they did in 2010-13. It is mainly the massive increase in salaries during covid of the IT sector ( we have an entire thread that discusses this) and its direct and indirect impact on salaries of other parts of the economy that's causing the price rise. Add to it were the extremely low interest rates that were in effect until March this year. As interest rates go up and the job boom stabilizes the demand will come down and then we could see discounts emerging again.
	(3) Thanks

28th July 2022, 08:26	#18
kovilkalai BHPian Join Date: Jul 2015 Location: Bengaluru Posts: 181 Thanked: 517 Times	Re: Car price hikes of 1 - 2% in the last month - What's the reason? Why should the government intervene in car prices? It is a want, not a need. Let free market principles apply. Every time someone raises prices, we don't have to run to the government for help. Auto company margins are in the single digits even with the price increases. They are companies with a profit motive and it is perfectly alright for them to increase prices. By this logic we should cap IT company billing rates (because their margins are much higher) and prices of other goods as well.
	(3) Thanks

28th July 2022, 08:56	#19
srikanth.vemuri BHPian Join Date: Jun 2012 Location: Bangalore Posts: 48 Thanked: 71 Times	Re: Car price hikes of 1 - 2% in the last month - What's the reason? As in this thread, even the thought of government involvement takes the focus away from the business aspects. Best that the government not intervene in pricing decisions, particularly for non-essential goods like cars. Coming back to the topic of rising prices, as others here mentioned, it could chiefly be due to the market forces/ supply-demand mismatches throughout the chain, including the last link of carmakers (or used car sellers) and customers. It is a cyclical industry, hence expect it to revert after a while. Best to sit tight (as a buyer) if you can afford to wait.
	(2) Thanks

31st July 2022, 15:34	#20
Turbanator Team-BHP Support Join Date: Mar 2011 Location: Gurgaon Posts: 7,450 Thanked: 31,938 Times	Re: Car price hikes of 1 - 2% in the last month - What's the reason? Mod Note - Please do not post anything about your Political views. In case any relevant posts have been edited/ deleted, kindly repost. Thanks for understanding. Last edited by Turbanator : 31st July 2022 at 15:59.
	(1) Thanks

31st July 2022, 16:46	#21
Kapany BHPian Join Date: Jun 2021 Location: Bangalore Posts: 76 Thanked: 218 Times	Re: Car price hikes of 1 - 2% in the last month - What's the reason? Was speaking to someone at MnM and heard of another potential hike on the Thar. I wonder if in some days we wished it was only a 1-2% hike! Also, kudos to the mod team for removing problematic posts. Always good to discuss cars on a car forum. Last edited by Kapany : 31st July 2022 at 16:53.
	(1) Thanks

31st July 2022, 19:11	#22
jetsetgo08 Senior - BHPian Join Date: Jul 2016 Location: Hyderabad Posts: 1,102 Thanked: 1,623 Times	Re: Car price hikes of 1 - 2% in the last month - What's the reason? Manufacturers are now making money of whatever little they lost during the lows of severe pandemic. Also, saving moolah for the speculated tough times ahead. Prices of new cars may stabilize in a few months time, but that's about it. There would be slight increase in the ex-showroom prices which could potentially be followed by discounts. Then again, it would be a typical scenario of buy at Rs.Y today or buy at Rs.(Y+30k) followed by 30k discount. However, to someone looking for a used car, there could be a huge correction in the used car prices in the next one year, once the demand for cars saturates. The current peak in demand despite soaring fuel prices, is due to a combination of need of (non-public transport) mobility and you live only once lifestyle.
	() Thanks

31st July 2022, 22:13	#23
RedMaw BHPian Join Date: Feb 2022 Location: Vellore Posts: 103 Thanked: 411 Times	Re: Car price hikes of 1 - 2% in the last month - What's the reason? Make hay while the sun shines. Its just business 101 but as a consumer, we are helpless. Car manufacturing is very costly process. A single platform might cost 1000s of crore for development and couple of failed launches might sink a company. It has happened time and again. Even most successful car company in the world, Toyota has just 1/3 of its operating expanse as cash on hand on the other hand Apple has more than 1.5 years worth of operating expense as cash on hand. All this says, even with increased price and continuous successful product launches, car companies are always on thin ice, on the edge of survival. Its no wonder, car companies are raising prices like crazy to cushion themselves for the upcoming recession.
	() Thanks