Understanding why car manufacturers have hiked prices by 1-2% recently

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.

BHPian SinghBHP recently shared this with other enthusiasts.

In the last month or so, almost every manufacturer has increased prices atleast by 1 -2 percent. What's the rationale behind 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 manufacturers leading to regular price hike.
• Can there be a say and control of the Govt. on this or are these manufacturers free to loot customers. Meaning can the Govt act as a voice for 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.

Here's what BHPian itsmeparvathy9 had to say on the matter:

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.

Here's what BHPian Black_Star had to say on the matter:

The govt themselves are looting its people, 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 common man but a curse for 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.

Here's what BHPian ajayc123 had to say on the matter:

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.

Here's what BHPian Durango Dude had to say on the matter:

 Govt is Lootera No 1. 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. On top of this there is also "corruption" which has to be factored into every new factory being built, amenities being provided. this also goes to the Govt officials, politicians and local thugs: every one wants his pound of flesh. After all this one has to set up dealers, 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. One look at the vehicles that our politicians ply in will give you an idea of his/her 'looting' capacity. Unfortunately the 'officials' who will have an almost equal share can't blatantly flaunt their wealth for obvious reasons. 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! This sort of tax anarchy/arbitrariness, corruption at all levels and huge population which suffers from amnesia and made to suffer despite paying taxes and an unaccountable Govt: which ever party comes to power. People are faced with problems on a daily basis and have lost the will to appeal and fight and meekly surrender to what ever the Govt asks in the form of tax increases and so the wheels keep turning. People evade taxes because they don't get back even 5% of what they pay as taxes and their living conditions remain the same or get worse with each passing day.

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