Price hike by Indian automakers may hamper new vehicle sales, says GlobalData

Following the news that Indian automaker Maruti Suzuki is set to increase vehicle prices in September across India;

Bakar Sadik Agwan, Senior Automotive Consulting Analyst at GlobalData, a leading data and analytics company, offers his view:

“The increase in prices though justified will add additional burden to customers’ pockets at a time when India’s struggling economy is impacting private consumption that may eventually impact the sales.

“While most Indian OEMs announced price revisions earlier in January, it is the third time this year that Maruti Suzuki has announced a price increase due to increase in input costs, which can be understood given the supply-demand imbalances created in the auto sector due to the COVID-19 and the semiconductor shortages.

“Over the past few years, major regulatory changes and increase in competition have made automakers to work on thin margins. With rebound in demand and slight correction in prices, automakers would be able to maintain healthy margins.

“On the flipside, it is also important to note that the rebound in demand post the second wave is attributed to the pent-up demand and increased traction towards personal mobility. The market trend is still towards the cost-effective/mass-market cars, primarily in the rural area – a key shareholder to the overall sales. The rising vehicle prices may push customers towards cheaper vehicles in the used market, which is getting trustworthy and organized day-by-day and hence, it will affect the new vehicle sales.”

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