Luxury Car price hike inevitable, thanks to Rupee devaluation

Luxury cars have always been something we love thanks to the comfort, quality and class they provide. But soon, one would have to pay more than before in order to own any luxury machine in Indian market. 

Even after seeing a robust increase in sales on the back of new product launches, Mercedes is all set to increase prices on its models to offset the impact of rupee depreciation. 

Price hike is inevitable. We can’t cover (rupee depreciation) and part of it (increase) would have to be passed on to customers,” said Eberhard Kern, managing director and CEO, Mercedes-Benz India. 

The company would take a call on the hike and the quantum within the next few weeks. This comes close on the heels of other German luxury carmakers BMW and Audi announcing 4%-5% increase in prices.The rupee has tumbled by about 12% since the beginning of May. 

“We are getting future-ready. India is on our strategic roadmap and is one of the strategic markets,” Kern said. Bookings for the newly-launched GL class luxury SUV (sports utility vehicle) has been good and the diesel version of the B-class has a two-month waiting list, he said.  

Mercedes GL Class

While sedans will continue to be an important part of Mercedes-Benz’s product portfolio, SUVs and compact cars will grow and expand, he said. The luxury car segment, which accounted for just 1.2% of the overall market for cars in 2012, would grow to 4% by 2020 when the Indian market is expected to produce 7 million cars, Kern said. 

Not only Mercedes other manufactures like Audi, which has increased price last month by 4% across its model range available in India. It led to an increase of 1.52 lakh on the Q5 price and the price of Audi A6 sedan increasing by 1.80 lakh. While the top-end Audi R8 price increased by about 4.42 lakh. 

Market conditions are challenging, but luxury segment has seen some propelled demand due to fresh launches. A depreciating rupee and the rise in input costs have made increase the prices of the entire range, though we are offering customised and innovative finance options from Audi Finance to make the purchase more attractive for our customers,” said Michael Perschke, head, Audi India.

While, BMW India has not decided the quantum of the hike. “Following a path of sustainable growth, BMW Group India has always been built on long-term thinking and responsible action. We are making price decisions with all due care and consideration ensuring that they pay off in the long-run and the real quantum would be announced in next few days,” Philipp von Sahr, president, BMW Group India, said.

BMW

We will have to see if price hike can be something that decreases sales for these giant manufacturers. However, considering the new launches and the increase of luxury cars on Indian roads we don’t think that 4-5% of price hike would stop anyone to buy the car they admire.