Thursday, May 17, 2012
By Manoj Kumawat
Car price hike impending in the wake of devalued rupee
Those who wish to purchase Maruti Ertiga or all new Hyundai i20 and go on vacations this summer in it must prepare themselves to shell out some extra money as the devaluation of rupee could trigger a further car price rise soon. The falling rupee could have its immediate toll on the car prices in India and this will be the second price rise after car price rose soon after the Budget. The rupee devaluation has increased the input costs as major chunk of components are imported from across world. However, exports could save the show and detain car companies from raising car prices.
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Notably, the rupee crisis in India will have an adverse effect on not only cars but will also trigger the rise in prices of consumer durable and will further add to the inflation worries. Significantly, as the car companies import as lot of components from foreign suppliers, they have to now shell out more rupees to buy the same thing and thus the input cost will rise. The car companies then will have to thus increase the car prices in India. Most of the car companies such as Maruti, Tata, Hyundai and a lot of other foreign companies such as Honda, Toyota etc import a large number of components from suppliers spread across the world or in their homelands and thus with the decrease in rupee value, they will have to pay extra and thus they are sure to transfer the burden on to the car buyers by increasing car prices.
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However, it is said that the exports by these companies will compensate the loss and it might be the case that some of the car companies such as Maruti, Hyundai or Tata could defer car price rise for sometime and wait to see if the rupee strengthens.