Very simple they don’t want to lose market share to their competitors. They are ready to see poorer bottom lines but not willing to accede a small pie to other players. Marketing is a war and here you win by outshining your competitors – a famous saying by Al Ries and Jack Trout.
But is the Government also accepting the OEM’s methodology of increasing the demand by either themselves artificially absorbing the increased cost of commodities or by making their suppliers absorb the same.
Government has realized one thing that they cannot allow growth to happen at the cost of inflation. If inflation is high, they will keep increasing the interest rates and that will apply the brakes on the growth. Auto OEM’s are crying foul due to less takers available in the market to get their cars financed at a higher cost.
OEMs could have got their bottom lines also improved had they passed on the increasing commodities prices to their customers and artificially inflated demand would have also gone down.
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