The interim budget announced back in February this year, was expected to revive sales in the auto industry. But, that has not happened. Thanks the budget, car manufacturers in India were able to reduce car prices by a good margin. Maruti Suzuki itself had reduced prices of their cars from Rs 8.5k to Rs 31k. This did gave a momentary respite, but everything is back as it was.
In fact, Maruti Suzuki says that the budget backfired for them. They had to compensate their dealers for price cuts which were announced in Feb 2014. In all, Maruti paid Rs 143 crores in compensation for Jan-Mar 2014 period.
Apart from falling car sales, car manufacturers in India are also battling the fluctuating value of Indian Rupee. Honda and Mahindra have already announced a price hike. So, speaking about increasing prices of their cars, Maruti Suzuki says that there is no scope for increasing car prices as of now.
Indian car industry is going through its worst phase in more than a decade. In 2013, for the first time since 2002, Indian auto industry reported a decline, and that too of 9.59%. Car manufacturers are not sure when the segment will revive. They have tried all their cards, offering discounts, launch new cars, update the existing one’s, improve the customer-dealership experience, and much more. But still there is no respite on the horizon. Analysts expect that the market will start picking up later this year, or early next year.