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News: As per media sources, leading passenger vehicle players such as Tata Motors and M&M have reduced prices of some of their key models by up to ~₹ 2 lakh/vehicle. M&M has reduced price for XUV 700 AX7 variant by ~₹1.5-2.2 lakh terming it as a celebration offer with XUV700 reaching a milestone of 2 lakh units of sales volume since launch. On similar terms, Tata Motors has reduced prices of Harrier & Safari models by ₹ 50,000-70,000 per unit along with offering other benefits.
Views: Channel inventory in the Passenger Vehicle space has been on a higher side with present inventory levels >60 days and one of the highest in the recent past. The dealers have been requesting for OEM support to clear such high inventory (pegged at ~₹ 60,000 crore). This shall help in reducing the channel inventory however might be marginally negative from the margin standpoint for OEMs for an interim period. It will be pre-mature to conclude such price reduction as a response to strong hybrids finding favourable taxation benefits in Uttar Pradesh recently. We shall closely monitor developments in this space. From the new product launch standpoint as well as spending in EV space, we hold a positive view on both M&M as well as Tata Motors.
Impact: Neutral