Business Daily from THE HINDU group of publications
Sunday, Oct 14, 2007
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Business Daily from THE HINDU group of publications Sunday, Oct 14, 2007 ePaper |
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Corporate
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Events Marketing - Strategy GM celebrates 100th year with 16% price cut on Spark
K. Giriprakash Bangalore, Oct. 13 The unprecedented 16 per cent reduction in the price of General Motors’ small car Spark is being seen as an overdue correction but the car maker claims that it is more to do with the company’s move to reward its customers on the occasion of its 100th anniversary. “To celebrate the 100th year, General Motors decided to mark the occasion with price reductions on some of its popular models across the globe for a limited period,” the Vice-President for Corporate Communications, Mr P. Balendran, told Business Line. But some of the company’s dealers want the price reduction to continue beyond the eight-day offer period. “Spark always needed better pricing if it had to compete with other small cars. The company should not revert to the old price,” an official with a dealer who did not want to be named said. Rate surpriseWhat has caught the industry by surprise is the huge discount of Rs 53,000 on a car which was launched a mere four-five months ago. Though the company officials admit that General Motors will take a hit because of such a big reduction, it is likely that the parent company might make good the shortfall. General Motors also expects Spark sales to double this month because the Rs 53,000 cut gets the price tab on the car down to about Rs 2.79 lakh (Delhi’s ex-showroom price). Since its launch, Spark’s average sales is around 1,500 units per month. But dealers claim that its subdued sales is because the company has not been pushing the product well, and such sudden one-off discount could in fact harm the sales further. “Customers will wait till the next discount comes along or rather go for another model,” a dealer said. “Car manufacturer usually give such discounts on cars they want to phase out and not on those which have been just launched,” the dealer said. He said the dealers were also not taken into confidence before announcing the price reduction. General Motors recently increased the capacity of its existing plant in Halol in Gujarat by 25,000 to 85,000 units per year, pumping in an investment of about Rs 100 crore. More Stories on : Events | Strategy | Cars
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