Rahul Bajaj sees little room for price cuts in two-wheelers

November 18th, 2008 - 6:18 pm ICT by ANI  

P. Chidambaram

New Delhi, Nov 18 (ANI): Reacting to Finance Minister P. Chidambaram’’s call to reduce prices to boost demand, Industrialist Rahul Bajaj today said that there is no scope for price cuts in two wheeler industry in near future.
Speaking on the sidelines of an Economic Summit here, Bajaj said the firm’’s scope for price cuts was limited by tight margins on motorcycle sales, which were likely to contract in the year ending in March.
“Price reduction is not going to create magic in the automobile industry, so we have asked for minor excise reduction, but that is also not going to do any wonders for us,” he added..
Bajaj further said that profit margins on two-wheeler sales were just 4-5 percent and no more lowering of prices was possible, unlike other industries, which have margin of atleast 30 percent.
“If everybody cuts price, then how would the market share of one company increase? It is a very competitive market. Even after cutting prices, will the total market share increase? Talking of price cut, that’’s what we have been doing for past three years. Even without the government telling us, we have been offering discounts in the two-wheeler industry. Is it not price cut? Our margins are not 30 percent,” he said. (ANI)

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