Demonetization vs Price Hike: Is it Viable?

[Akash1886]

Friends,

We all have been dealing with the aftermath of Demonetization which has taken entire economy and all the sectors by surprise (to a great extent an unpleasant surprise). So in these testing times where a person is finding it difficult to make the ends meet, is it really a viable move by auto-manufacturers to raise the prices of their model line-up? It is not a rocket science to understand that in times like these where the new currency is not readily available to people will the price hike of cars be of any use? If the end-consumer isn't able to make arrangements to buy a entry level hatchback in today's situation then how viable is the move by auto-manufacturers for increasing the prices? Almost every major auto-brand shall be increasing / has increased the prices of it's vehicles w.e.f from 2017 January but what if the situation which is prevailing right now gets even worse? What if the currency shortfall isn't resolved? The priorities as of now of entire population has changed and i.e first to meet the regular needs and then go for these extra comforts. So, seeing the present situation, I would like to have your views on Demonetization Vs Price Hike.

Regards

Akash

 

[allhyundaicars]

Production costs increase from time to time , demonitosation or not , you just can't absorb all the increase in cost of production.

Also what about production loss that the demonitosation created ? I am sure no manufacturer can absorb such losses. Talking about each and every manufacturer and not just car manufacturers.

 

[vijay_968]

Price Hike during Demonetization Drive is viable.

Why NOT ? Mostly the guy without Black Money gets a Hatchback as a first car. He doesn't have a problem in issuing a Cheque. Buying car thro EMI scheme is also not a big deal. Just ask for Rs.3,15,000 instead of Rs.3,00,000. I gave a cheque, on the 1st day and took my Verna few days later in 2012 (.... OK OK, along with some Cash too).

However, the period of slow down in Car Sales WILL CONTINUE (due to Demonetization) for few more months, with or without price hike. I feel this was a sweet time for the manufacturers to hike the price. They have added a "micro problem to a major problem"; we call it "plus delta" in engineering.

People who were flaunting their costly cars, "by looting money meant for common Indian" might struggle to justify how they got their cars, once "car payment mode" is linked electronically.

People will continue to buy ultra costly cars the way certain weddings took place in Bangalore and in Nashik and the way Crores of new currency notes are being unearthed all over the country.

In a nutshell, Automobile Manufacturers did what they HAD to do. Or What they wanted to do; to get THAT extra Profit. God only knows.

Disclaimer: I do not support or oppose our PMs Demonetization Drive, at least till the the data on "Black Money made zero" comes out.

 

[a4arun]

I would like to have your views on Demonetization Vs Price Hike.

Regards

Akash

This shouldn't be a problem for the mass Market folks as they any deal with cheques and loans. I am not very sure about raw material cost increase as I do not see much of industrial growth or increase in consumption. Real estate has more less become stagnant because of global uncertainties. With factories shutting down, I do not see from where the consumption is going to come. Me thinks this price rate hike would give some vision to give discounts later till the situation improves. After that it all adds to profit. Please feel free to correct me.if I am wrong.

 

[TSIVipul]

It's perfectly normal. Anyone who has paid all his taxes, can buy the car by paying via cheque, draft or NEFT/RTGS. So demonetization may influence the number of car sales but price hike, well; it has nothing to do with demonetization.

 

[Akash1886]

Friends,

Update:

NEW DELHI: The demonetisation measure has impacted the sale of luxury cars as buyer sentiment due to the measure - aimed at eliminating black money+ - has dampened. The decline has been steep, even faster than the fall in general passenger vehicle industry, as retail sales have come down sharply, say officials and dealers of companies such as Mercedes Benz, Audi and BMW.

"Sudden changes in policies are difficult to explain to the headquarters," said Michael Jopp, VP sales and marketing at Mercedes India. "The overall business environment is not helpful. We are now cautious on our outlook."

A top dealer for Audi said that walk-ins have reduced. "While black money was not playing a major role in the sales of luxury cars, the issue is of sentiment. People are unsure of what might happen in the coming months, and so are postponing purchases."

Link

Regards

"Akash

 

[krishna6239]

I think price hike is mainly due to introduction of a newer safety norms by the government which will be effective from OCT-2017. They are just laying all developmental and testing costs on the consumers.

I believe demonetisation has little to no effect to a person (like me) who regularly pays taxes and uses digital transaction frequently.

Most of those premium/luxury car buyer purchase car via loan and pay those loans from their black money to stay under radar of IT dept. Hence the decrease in sales of cars in these segments.
In fact those who have legit income record and correct tax payers are buying cars since dealers are willing to reduce price more than normal to get sales.

 

[SSKM]

Demonetization did slowdown the economy quite a bit. Many businesses started showing smaller or negative growth rates. If this continues for a little longer time, it impacts every sector. Automobile sector shall also have its impact. Whether price rise or not, it will still see dimming sales. If they want to stay afloat, they need to sell at their marginal cost or a little over it. To do so, discounts will also be announced eventually. Next 2 years shall see a more definitive way ahead.