Why Car Brands Hike Prices Every Year? Reasons Will Shock You! » MotorOctane

Every year in December multiple automakers start to announce a price hike starting from the new year. The major reason behind this hike is said to be ‘increasing input costs’, but is it only this or the automakers are hiding another fact from you? Let’s discuss – 
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Car Price Hike – What’s The Real Reason?

Even this year, brands have started to announce a price hike of some percent that will be applicable from the start of the new year. Just besides that, the automakers always term these price hikes as the result of increasing input costs. But, what you don’t know is that this rising costs are only a short part of the hikes, and there’s a lot more reasons which are majorly buyer centric that make automakers reassess the price. 

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Input Costs: The most cited reason for the price hike. Yes, the rising upfront costs urge the manufacturers to increase the prices of the model. At the start of every year, the manufacturers plan to invest in more materials, which certainly increases the costs to an extent. 

Disseminate losses: It is one of the reasons that is customer centric. Many automakers offer several ‘year-end deals and discounts’ and other benefits, to not let the inventory pile up. In this process, several losses are borne by the brand. And this price hikes help the brand to recover the cut in profits. 

Unsold Inventory: Another the most obvious reason is to disseminate the losses borne in the ending months of the last year. Many automakers have a pile of unsold inventory, which eventually turns out to be a loss for the manufacturer. Now, to come out of such losses, the automakers intend to raise the price of the car models. 

Buyer Behaviour: Believe it or not, the buyer’s behaviour is one of the most affecting factors for the price hike. In the new year, we often see cars from the last year are sold at a good discount. The difference between prices certainly affect the buyer’s behaviour – many-a-times buyers think paying more will make the model more efficient, while some consider buying a model with a good discount.

These are the reasons why automaker consider to raise the prices of the models in the new year.

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