Amid declining demand for new cars and steep year-end discounts, automakers’ discussions about price hikes in January 2024 have left industry stakeholders puzzled. Dealers are already burdened with significant inventory, leading to concerns over the industry’s strategies to address sluggish sales.
Traditionally, announcements about price increases toward the end of the year serve as a tactic to boost showroom visits, encouraging buyers to purchase vehicles before rates supposedly rise. However, these proposed hikes, often around 3%, may not materialize across all models.
Major players like Maruti Suzuki, Hyundai, Mahindra & Mahindra, Audi, and Mercedes-Benz have announced potential price hikes, citing inflation and rising commodity costs. Ironically, many of these brands are offering substantial discounts, ranging from a few thousand rupees on small cars to several lakhs on luxury models, to clear excess stock.
Dealers and industry experts, however, view this as a marketing ploy rather than a necessity. C S Vigneshwar, President of the Federation of Automobile Dealers Associations (FADA), criticized the practice, pointing out that dealerships are already overwhelmed with 75 days of inventory. He urged manufacturers to temper production and reduce new vehicle inflows.
Ravi Bhatia of JATO Dynamics highlighted the challenge of balancing profitability and consumer sentiment, especially for market leaders like Maruti Suzuki, amid aggressive incentives from competitors. For now, the industry’s focus remains on clearing 2023 inventories while navigating uncertain consumer demand.
