Car-makers in the country are going ahead with their proposed price revision in January, despite Tata Engineering pricing its new three-box Indigo in the Rs 435,000-525,000 range, Rs 50,000-100,000 lower than the competitive price in the mid-size segment.
The price differential had raised apprehensions that sales of the existing models of other cars will be affected in a market where discounts are the rule of the game.
Saying that the aggressive pricing of the Indigo would not impact their sales, car-makers like Maruti, Hyundai and General Motors said on Thursday that they would go ahead with the price revision in the new year as announced earlier this month.
General Motors vice-president P Balendran told Business Standard: "How does the Indigo price affect us? We have our own product positioning. The consumer is always looking for value for money, and they will continue to find the Opel Corsa a value-for-money car."
The lowest price of the Corsa is approximately Rs 540,000. Balendran stated that the prices would be raised, as announced, from January. "What can one do if the input costs are rising? The price of steel has gone up, so has the exchange value of the euro. In such circumstances, we cannot but raise the prices of the vehicles," he said.
A Maruti executive said the company would go ahead with the proposed price increase in the new year. Maruti's old warhorse Esteem faces stiff competition from the Indigo because of the pricing. The mid-size vehicle recently got a facelift recently and now comes with a diesel engine.
It is closest to the Indigo in terms of price. But sources said the prices could not be reduced. "We do not think the new car will be in competition so soon. But in any case, prices are determined by consumers and not competition," the sources said.
A Hyundai executive said the price positioning would help the Tatas to poach some volumes from the lower end of the C-segment, which accounts for only 15 per cent of the volumes in that segment, and the top-end of the B-segment, leaving the sales of its C-segment offering, Accent, intact.
The industry expects the Fiat Palio to face tough competition as well from the Indigo. The Palio positioned between the B and the C segments comes in the same price bracket as the Indigo. While a Fiat executive said there was no plan to counter competition since the new product was yet to hit the market and make any impact, there may be an option to make strategies afresh.
But again, pricing will be determined by the consumer, not competition. "Moreover, the price reduction in the case of the Esteem and the low price of the Fiat Siena did not result in a significant jump in the sales of these cars," an analyst added.