Auto companies in India under pressure and price hikes on hold: Buy a car now

For the first time in one and a half decades, a number of car manufacturing giants such as Maruti Suzuki, Volkswagen, and Hyundai Motors have decided against the price hikes that have become a norm at this time of the year.

The main reason behind this decision has been the drastic drop in sales for a number of auto companies. Sales of these companies in December have dropped by almost 25% of the sales in September 2011. This was the case even after companies tried to tempt customers into buying cars by announcing offers and freebies in the last quarter of 2011.

Auto companies had no choice last year owing to the depreciation of the rupee coupled with the high cost of inputs but to increase car prices. This should be music to the ears of potential customers as they will be now given the opportunity to purchase new models for the same price as the previous year. Price hikes for Toyota Kirloskar Motors would be announced soon.

December 2011 saw a number of carmakers announce price hikes of up to 1 lakh in the New Year. This usually does prompt buyers to purchase cars, and consequently boosts yearend sales for auto brands. Lower footfalls and model specific sales is likely to prompt auto companies in India to stick to discounts in order to ensure minimum sales targets that can help keep them in profit.

In fact, a number of cars that would find their way to the Indian auto market in 2012 are likely to be launched at an introductory lower price. This approach was followed by Mahindra when they introduced the XUV500 SUV, and bookings had to be stopped deliberately as they had surpassed manufacturing potential.