Shall prospective car buyers be expecting greater price discounts instead of Car OEMs raising prices in 2016? Why not?
Here is why:
Steel prices have crashed globally since last 16+ months. In India prices for various categories of steel have gone down by ~20% between Oct-2014 till Sept-2015 (source: http://www.meps.co.uk/indian%20steel%20prices.htm)!
With overall industrial growth is under stress for now & macro growth indicators are yet to give out long term positive signals coupled with challenges in other parts of world, can OEMs truly justify price rise on pretext of “rising input costs” where commodity markets are crashing everywhere? Midst of emerging “connected car” technologies all over, customers will buy old technology at higher relative prices unless value of improved or newer functionalities in these cars is much more than price rise!
Or, is it an opportunity for car OEMs to cash in to make that extra buck and raise the price bar as they develop new technologies & launch them in time to come? I am sure equity investors will like to have sales volume of vehicles continue on positive tragectory.
In short-term, it seems car OEMs will have to find new ways to get buyers to their showrooms to garner higher sales volumes if current global trend continues.
In any case, it will be interesting to see how this tussle of expectations plays out…
