The headline of this story will definitely leave you wondering. What exactly could be the other reasons? Will it be that the company is running at a loss or its purely due to the greed factor where more money has to be generated. Well far from what we as outsiders or critics see it as, the reasons are way different. For example, a few of the top-ranking officials from companies that have recently hiked their vehicle prices spoke to us on the condition of anonymity and explained the reasons. Trust us, the reasons given are completely logical and when we unravel them to you, they will seem very much plausible to you as well. If you do like such content, remember to share this news piece with your friends and family.
Reason number one: To maximise profit for dealers as well as investors. During times like this ongoing pandemic, it is but natural that the sales are low and hence to make up for this, a price hike will give everyone like the investors as well as dealers a much-needed shot in the arm. The overall hike will only be a few rupees added to the customer’s EMI and this is something that the end-user, we are being told, doesn’t really care about.
Reason number two: There is a new product that is coming up but will sit higher up than the existing one. Take for example the case of the recently launched Honda CB350 RS. A couple of months before the RS’ launch, HMSI got in the H’ness CB350 model. However, the price of the H’ness was hiked around 15 days before the RS was launched. This was to ensure that the price difference is only a few thousand so that someone looking at upgrading to the costlier machine shouldn’t feel the pinch. Hyundai discontinuing the diesel engine from the Grand i10 was to make sure that customers buy the expensive Nios version.
Reason number three: A new vehicle is coming in but will be the entry-level model. If there is no significant price gap between the upcoming and existing product, customers will not be lured by this. This was in the case of the Maruti Suzuki Alto K10 and the S-Presso. The latter was technically a replacement but continued to be sold alongside for sometime before the Alto was discontinued. Maruti increased the cost of the WagonR before the launch of the S-Presso to create a price gap.
Reason number four: An update is coming and it is costly. Manufacturers tend to increase the price of a slow-selling model to ensure that when the upgraded car or bike comes in, the cost hike is very low. For example, the TVS Apache RR310 has been continually getting updates. At launch in late 2017, the bike was priced at a delectable Rs 2.05 lakh, ex-showroom. Now, the price is almost Rs 2.50 lakh, ex-showroom. A new update is coming next month and this means the list price will again go up by a couple of thousands. If for example TVS had increased the price of the product directly from Rs 2.05 lakh to Rs 2.50 lakh, then the number of takers will be far less. Instead, they have been giving the bike updates as well as a slight price increase over the year to bring it to this level. Now, the updated 2021 RR310 will likely be priced at Rs 2.55 lakh, making it at par with the KTM RC390. What increments in terms of hardware or features it gets is something we will come to know on April 7, 2021.
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