Knapp dismisses the idea adding that for starters, diesel VW cars will be eliminated altogether from the firm's lineup of cars that presently include Passat and therefore any change in price of petrol cars will be small. Knapp goes on to add that the company which recently subsumed all its brands under one centralised leadership has benefited from the streamlining. "Where there were 3 CFOs, there is now one which speeds decision making and resources such as manufacturing, sales and marketing are shared with advantage."
Every carmaker will have its own strategy designed to pass on price benefits to their customers with a "soft-landing", says Kavan Mukhtyar, partner & leader, automotive, PwC India. "Some automakers have in the last six months started hiking prices by a percent or two at a time,' he says.
His point is that in April next year by the time BS VI
regulations become the norm no company would like to announce a 10 per cent or a 15 per cent price hike at one shot as that would shock consumers, especially in the ultra-sensitive segment that includes small cars costing less than Rs 8 lakhs, and two-wheelers.
Ironically, the only segment that is growing is the sport utility vehicle segment one where VW’s presence is limited with just one product offering — the VW Tiguan, which some feel at over Rs 30 lakhs is too expensively priced for the Indian market. Knapp says that the company will be bringing in a more competitively-priced city SUV in the near future. Expect that to be in a similar price and size category as Hyundai's Creta.
An auto industry executive, who declined to be named, said that auto makers are watching each other closely to see who will blink first and hike prices. "War-rooms and strategy teams are actually trying to figure this out in real-time," he said.
"Equally there's also a group of automobile
makers that will absorb the costs for say a quarter or two, see how the market settles and then take pricing calls," Mukhtyar says.