Monday, November 28, 2011
By Pranjal Gera
Maruti, Toyota, GM & Honda likely to raise car prices by up to Rs 25,000
The leading car makers in the Indian market are gearing-up to raise the car prices by Rs 10,000 to Rs 25,000 from coming month. The continuously depreciating rupee has made it very difficult for them to operate on current pricing, as importing components from other market has been becoming more and more expensive, since last few months. Since January 2011, the value of rupee has decreased over 17% against the US dollar, reaching to an all time low figure at Rs 52.73 in November 4th week.
The leading car makers including country’s largest car maker Maruti Suzuki, largest car exporter Hyundai and premium car maker Skoda have already said that they plan to hike the price of their portfolio cars within a few days. As per the executives of these car makers, the weakening rupee has caused a considerable increase in the cost of imported components. The major impact of this sharp depreciation in rupee has been on the car makers who use 10 to 40 percent imported content in the production of their cars in the Indian market.
According to a recent statement given by a senior Maruti executive, due to continuously increasing pressure of depreciating rupee the company will have to pass on the cost to the buyers , so that the rising cost of the diesel run cars can be offset. It is to be mentioned here that Indian auto giant Maruti Suzuki imports components of worth Rs 8,000 crore annually. The company is believed to have been losing 15 percent of its margins due to this sharp depreciation in rupee.
On the other hand, even the luxury car segment is not left unaffected by this weakening of rupee as car makers like Audi are expected to raise the price of their cars by up to Rs 50,000.
According to market watchers, there can be disastrous consequences for the Indian automobile industry if rising completion couples with a number of other negative factors including rising fuel prices, high interest rates, rising input material costs and a hike in price of vehicles.