Saturday, May 03, 2008

Hyundai Motor Company :Selling new car in old price

In Canada, Hyundai Motor Company (SEO: 005380) just took the fight a step further by dropping its product price to four figures. Currently, Hyundai is selling its Accent model at $9995. This used to be the price of cars 13 years ago. However, Hyundai is not alone in this. Kia Motors Corporation (SEO: 000270), another major competitor of Hyundai, is also offering its Rio model cars below $10,000. The result is, some buyers get so excited that they even do not bother to test drive the car. Driving.Ca reports:

But it also highlights just how much Canadian car prices in general have escaped inflationary pressure. If it had followed the same 29 per cent cost increase since 1995 that other goods in Statistics Canada's consumer price index had, the Accent would retail for $12,890 today. Pricing the car under $10, 000 gives Hyundai an advantage in appealing to budget-conscious buyers who might have considered purchasing a used vehicle, said Vic Singh, chief economist at the Canadian Auto Dealers Association.

To meet the growing demands of the buyers, Hyundai’s Korean factory has increased its output. Canadian car buyers are becoming more and more price conscious. In such a situation, Hyundai has agreed to sale cars at lower prices and the dealers also agreed to accept lower profit margin. According to John Vernile, vice-president of sales and marketing, Hyundai Auto Canada Corporation, as the buyers have become price conscious, it would be better to give them a price that would motivate them very much.

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