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Car makers may up discounts

autos Updated: May 24, 2012 23:03 IST
HT Correspondent

Wednesday's steepest-ever petrol price hike has shocked the domestic car industry into fire-fighting mode, and carmakers have begun offering higher discounts on petrol cars.

The increase in fuel price would increase the cost of driving petrol cars, and is expected to directly impact sales. India's second largest carmaker, Hyundai, announced a petrol price lock assurance programme that insulates customers from the current price hike for the next 7 months on its cars.

"This will insulate the customer from the impact of the price hike and is valid on purchases made till May 31," Arvind Saxena, director marketing and sales, Hyundai motor India Ltd, said. "The price hike is severe and we need to soften the blow."

Car sales had grown by 25.7% in 2009-10 and then again by 28.2% in 2010-11. In 2011-12 however, growth slowed down to just 4.72% as a combination of inflation, interest rates and high cost of fuel kept customers away.

"We were anticipating a hike, but the quantum was completely unexpected," said Nigel Wark, executive director, marketing, sales and service, Ford India. "This is going to worsen the automobile segment's sluggish growth."

With the price difference between petrol and diesel ballooning to R32 per litre, demand for diesel cars is expected to surge even as the industry is operating at its peak capacity on diesel cars.

"The hike this time is more than all the hikes last year in three installments," said Mayank Pareek, managing executive officer (marketing and sales), Maruti Suzuki India Ltd. "The demand for diesel cars, which is already high, will continue to rise. Ironically, none of us has extra cars to deliver as we are all operating at peak capacities."