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-   -   Car price hikes of 1 - 2% in the last month - What's the reason? (https://www.team-bhp.com/forum/indian-car-scene/254680-car-price-hikes-1-2-last-month-whats-reason.html)

In last month or so almost every manufacture have increased the price atleast by 1 -2 percent. What's the rationale of all the price increase by manufacturers?

- Is it really inflation/increase in production costs or these car manufacturers are over-confident that people will buy their product at any cost.
- Is it because of Covid Impact, Supply chain or Chip issues we hear in news ?
- Or could it be related to some sort of cartelization and agreement between all these manufacturers and they all increase prices for their vehicles one by one.
- Another side of the story is that in spite of price increase, unemployment and economic issue we hear for India the sales are still good enough. Is this the reason for over confidence of the Manufacturers leading to regular price hike.

- Can there be a say and control of Govt on this or are these manufacturers free to loot customers. Meaning can the Govt act as a Voice of Customers.

Most of these cars out there are not even worth the price they are selling at but still people are buying or shall we say forced to buy as we do not have any choice ?

Inflation/increase in production costs is one major factor, the falling rupee also comes into play as many of the inputs required to manufacture a car, like parts of the engine, gearbox etc., have to be imported by many manufacturers.

Car manufacturers are over-confident that people will buy their products at any cost. Maybe, it's a demand/supply chain, where the demand is more, and supply is; that's why we have huge waiting periods for many popular models, so despite the price hike, people are willing to buy.

Supply chain/chip issues tend to increase the waiting period, thereby contributing to high demand. Usually, manufacturers do increase the prices two or three times a year nowadays, and it has a lot to do with all of the above factors.

Can there be a say and control of Govt on this, or are these manufacturers free to loot customers? Meaning, can the Govt act as a Voice for Customers?

Hardly a possibility.

Most of these cars out there are not even worth the price they are selling at, but still, people are buying, or shall we say, forced to buy as we do not have any choice?

Yes, people are buying and are willing to buy, if we stand up against them, most manufacturers with low sales tend to exit the market, and the popular cars will still prosper. It is a fact that nobody can stop Maruti or Hyundai based on the demand their cars have, but when we get good alternatives from Tata and Mahindra, we buy them, and their demand increases which force the market leaders to think and offer better products.

As you can see, Maruti has been on a launch spree, launching new products or updating its existing ones to keep in line with the increasing competition.
But as regards prices, I don't see any manufacturer keeping their prices constant.

Have you seen the latest changes in GST? Govt has laid down various rules, policies and taxes which already restrict the manufacturers and if they do it further then more companies will leave India.

Moreover, even if they do what will be the basis for it? It can be a boon for the common man but a curse for an enthusiast. Can a Suzuki Alto and Toyota GR Yaris be similarly priced? From govt perspective, they both are hatchbacks, so they must have the same price.

Singh Sahab, all markets are cyclic, and we are at the peak now.

I am just being patient, and staying low. In a year or two, this should fizzle out on its own and we shall hopefully start seeing value again. By showing eagerness and excitement, we are making it more difficult. Unless there's an emergency, there's not much sense buying now.

We cannot sustain the current growth rates and demand for too long.

Almost 50% or more of a car's value is taxes. On top of it, they increase taxes since the present structure is not enough to satiate the 'tax appetite' of the Govt. After all, this one has to set up dealers and service outlets and coordinate with them and keep the customer satisfied; man you're actually getting a 'good' deal considering the number of fronts a car maker does battle.

Read somewhere that for every Fortuner sold, Govt makes Rs 18 lakhs in taxes, the dealer makes Rs 1 lakh, and Toyota makes around Rs. 40000 to 1 lakh!

Yes , waiting seems to be the best strategy here. Or look for pre-worshipped ones suiting your need.

I would even avoid second hand purchase, and rather wait, as the second hand market is also hot

It’s a classic case of demand and supply mismatch in the market today. Even though the supply slowdown was induced by covid lockdowns and chip shortages, it seems it has brought the manufacturers to a very sweet spot as regards sales. Instead of producing on a regular scale and discounting products by competing in the market, the slower production cycle actually seems to be working better for them as they don’t need to offer any discounts, production can be done as per demand and they can continue raising costs at their whims and fancies, read Toyota in particular.

Of course, this strategy is not sustainable on a long term basis as eventually demand will straighten out and ROI over capital investment, required economies of scale, disruptive market dynamics viz. govt. regulations, shift in consumer behaviour etc. will eventually come into play at some point, but hey, who cares, make hay while the sun shines!

I don't know if market corrections work or not in segment upto 30 lacs (edit: 50 lacs in post covid era ;)), the only instance I recollect is of Ford reducing ex showroom MRP by 1 lac on Ecosport after Brezza release. There could be examples of heavy discounts during certain period of year or certain models. But overall, prices once up never go down. I don't even recollect OEMs adding features later to compensate higher prices.

All I can say is, if you can put away purchase then do so with caution that you will buy it at higher price later. If you absolutely need car, then this argument of inflation does not hold true in first place.

Supply chain constraints + corporate greed are reasons for the current trend. It should settle within 2-3 years. If you already have a car and planning to upgrade, please wait. Used car market is crazy too especially in the US.

+1 to varunswnt

Prices may never go down but will probably stabilise if the demand falls. Very unlikely that you'll be buying cars at prices lower than today, even after discounts.

I always assume inflation to be 7-8%pa irrespective of the data shared by the govt.

Basically if your investment can't grow higher than the rate of inflation, you'll be better off buying a car now than wait for things to cool down, provided you have income stability in the forecasted recession.

India is actually one of the cheapest places in the world to make cars, but unfortunately central and state taxes that amount to almost 35-45% of the total price don't let the consumers enjoy those low factory invoice prices nor the manufacturers who operate on thin margins.

It's as simple as friends getting together and deciding to have a party with no reason. Price hikes can happen with or without any reason as has become evident. But they have press releases with usually, routine reasons to justify the hikes. Partying friends though need not have press releases.

As regards price control by the government, government in fact controlled all automobile prices till 1975, when a Supreme Court decision ruled in favour of automobile makers quashing the price control decisions. In fact, the prices of trucks, buses, three wheelers, cars, bikes and scooters were almost the same since more than a decade or two during the control regime at its prime since 1957-75. It played havoc with the quality as car makers had no leeway to hike prices without government's permission. And they also extracted their profits at the expense of the customers and quality.

But all said and done there needs to be some regulation now to control such frequent and frivolous price hikes.

Japanese Yen has gone down by almost 20% since 2021, but companies like Toyota have increased their prices by around 15% (Fortuner and Innova).




We all had seen how all these manufacturers increased the prices when steel went past INR 75, and now, with declining prices of most commodities, including steel, none of them has lowered or even stopped increasing the costs.


I believe it is purely due to the demand that almost all companies can get away with higher prices without losing any numbers. Let's see how long can this continue.

On another note, I found a very competitive launch by Porsche.

https://www.team-bhp.com/forum/india...-57-crore.html

This car starts at 180 K USD and with 100% Custom Duty + 50 % GST this should be 485 K USD ( leaving 10% dealer margin in US) = 3,88 Cr but launched at 2,57 Cr:uncontrol

The government is an extension of the people. Hardly 3% pay direct taxes. Imagine a situation where cars are cheap but there are no good roads to drive them.

Low-level corruption has reduced to a large extent, and people are also to blame. For every officer that takes money under the table, there is a citizen at the other end who is willing to pay a bribe instead of paying the fine. Focus on digitization has improved many areas like RTO and challans, which were hot beds of corruption. This push for digitization should have been done much earlier, and work on infrastructure development is lagging by at least 3 decades due to a lack of focus on it. This is also why there is a difference between India and China in terms of Infrastructure and also why the size of China's economy is 5 times that of the Indian economy.