Xiaomi set to hike prices? Should you buy now?

The fall of Indian rupee is likely to hit buyers of Xiaomi smartphones, as the Chinese mobile maker firm has stated that it would decide on price hikes for its phones after evaluating the impact of Indian currency's slide against the US dollar. Xiaomi, which launched three new smartphones under its Redmi lineup earlier today, said that these are introductory prices for the first two months and if rupee value continues to slump against the dollar in coming days, the company may increase the prices of its smartphones. therefore, in effect, for all intents and purposes, a price hike is not likely for first two months.
 
After the launch event, Xiaomi India Head (Category and online sales) Raghu Reddy told PTI, “The prices (of phones launched) do take into account the impact…the rupee is at about 71, it takes into account that. This is an introductory price with Diwali coming up. Post that (Diwali), we will evaluate.” 
 
Reddy said that manufacturing locally in India helps in this situation as supply chain efficiencies allow passing on the benefit to consumers. However, a large part of the components are paid for in dollars as they are bought from suppliers from locations like Japan, Taiwan and the US among others.
 
He reportedly said, “As the USD continues to strengthen, your costs go up,” and refused to comment on the quantum of impact on the manufacturing cost. He, however, said the company would have to evaluate its entire portfolio and take a call on whether prices need to be revised.
 
Notably, Indian rupee's unabated fall continued for the sixth straight session today, hitting yet another closing low of 71.75, down 17 paise against the US currency. The domestic unit is witnessing slump in the wake surging oil prices and weak trend in emerging market currencies.
 
Intra-day, rupee plummeted to a historic low of 71.97 a dollar before finding some respite, staging some recovery towards the tail-end. The battered rupee has lost 165 paise in the last six trading sessions.
 
Xiaomi has previously stated that it will keep its net profit margin at under 5% to earn the “long-term support” of its customers. Large volumes with small profit margins result in “suitable hardware profits” for the company in the long term, it had reportedly said.
 
India is among the largest smartphone markets globally. Shipments grew 20% to 33.5 million units in the June quarter of 2018 over the year-ago period. Xiaomi grabbed the top spot with a 29.7% share, followed by Samsung (23.9% share) and Vivo (12.6% share), according to research firm IDC.
 
Xiaomi today launched Redmi 6, Redmi 6A and Redmi 6 Pro smartphones and priced the new devices in the range of Rs 5,999 to Rs 12,999. All the three smartphones will be manufactured in India. 
 
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Xiaomi Redmi 6A succeeds Redmi 5A, which saw more than three million units being shipped in the second quarter of this year.