Why did Hyundai not reduce their prices? 

LAHORE: Hyundai, like KIA Motors, has chosen to opt out of the downward price revisions that have been introduced by other automotive companies. 

Hyundai states that whereas other automotive manufacturers have increased their car prices multiple times due to depreciation of the Pakistani Rupee against the US Dollar, Hyundai maintained its prices and announced the lowest possible revisions in the industry. 

Hyundai states that it has only increased their car prices 13% compared to a hike of 22-24% by other automotive companies. Therefore, the company, Hyundai Nishat Motors, will not reduce its prices as it finds them to be justified compared to the competition. 

Furthermore, the company added that it has not suspended bookings for any vehicles, unlike other companies.

If Hyundai Motors’ statement is correct then the company absorbed the increase in their cost of production and chose not to pass it on to customers, unlike everyone else. This, however, may not be out of the goodness of their heart, but instead possibly because of their recent capacity increase. 

Hyundai Pakistan started off with very long delivery times in Pakistan because they did not anticipate the demand they received. The company sought to rectify this with the aim to increase production by 100% from 2021 to 2022. Profit can confirm from one of their sources, who requested to not be named, that Hyundai has indeed been able to expand its production significantly. And this is where the reason for not revising its prices may lay. 

In an attempt to mitigate future price shocks arising from the Rupee’s depreciation and in a bid to rid themselves of their past bottlenecks, Hyundai may have ordered additional completely-knocked-down (CKD) kits as buffer stock. This move would have insulated Hyundai from additional increases to their cost of production, and subsequently limit the number of price revisions required. However, after having ordered these ckd kits, Hyundai perhaps saw subpar demand. Given its record low sales in July, Hyundai most likely has ckd kits left over from its previous batch of imports that it can still utilize to a large extent to meet customer demand. 

This hypothesis is likely correct given Hyundai’s Independence Day offer, whereby customers could have the Hyundai Elantra 1.6, Hyundai Sonata, Hyundai Tucson, and Hyundai Staria HGS delivered to them within a month. Lucky Motors is the only company that delivers vehicles in a similar time frame, and it has buffer stock. The only other instances where Pakistani customers can avail a car immediately is when the car has negligible demand. 

Hyundai now faces the uphill battle of communicating this decision to customers who may not exactly be able to identify the value proposition Hyundai is quoting amidst the noise of price increases and decreases across the industry this summer. 

The ramifications of this on Hyundai’s sales volumes will only surface in the weeks to come as August’s sales figures are released.