Car prices may rise up to Rs 25,000 due to higher commodities costs
Car companies are likely to raise prices by up to 2-3% next month,
translating into an effective increase of around 10,000 for cars such
as Maruti Swift, Hyundai i20 and Honda Jazz . The premium models like
Toyota Camry or Skoda Superb will be costlier by over Rs 25,000.
“There is immense pressure to increase prices as key commodities
like steel and rubber have touched all-time high in recent months.
While the negotiations for our new long-term supply contract are
underway, suppliers are quoting much higher prices,” S Maitra, managing
executive officer (supply chain) Maruti Suzuki said.
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The company had raised prices by up to 2.4% in January for most of its cars to contain increasing input costs.
The auto sector has seen major rise in raw material costs as high
consumption commodities such as steel, rubber, aluminium, copper,
nickel have gone up in the range of 20-45% in November-February months
over the same period last year. Hit by higher commodity prices,
Automobile majors such as Maruti Suzuki and Hero Honda posted 20%
decline in year-on-year net profit for the October-December quarter.
Other companies are also toying with the idea even if they are not
willing to comment officially on price hike. “We haven’t taken a final
call yet, though input cost pressures are going beyond our control,” a
senior executive of Hyundai Motor India said.
The Japanese carmaker Toyota Kirloskar Motors would review the price
next month. “We evaluate our price position on three-month basis and
any price rationalisation could happen only next month,” Toyota
Kirloskar deputy managing director (marketing) Sandeep Singh said.
The price indications come at a time when the government itself is
contemplating a 2% hike in excise duty across the auto sector to take
it to the pre-stimulus level of December 2008. The government’s
decision to hike excise will automatically force all auto companies to
pass on the cost to customers in the same ratio.
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