India's second largest carmaker Hyundai motor India Ltd on Saturday announced a price increase across all its models barring its recent launch Creta, upto a maximum Rs. 30,000 due to rising cost of raw materials.
The increased prices would be effective from August 1. The company has not divulged the exact quantum of increase for respective models but it is understood that the maximum would be for its top of the line SUV Santa Fe. Its bestselling models like Grand i10, Elite i20, Eon and Xcent would attract much lower hike.
“The price increase has been necessitated by increase of input costs," said Rakesh Srivastava, senior vice president, marketing and sales. HMIL. "We have been absorbing most of the costs but now we are constrained to consider the price increase in these challenging market environment.”
Hyundai's price hike is likely to be followed by other companies as well. At the start of this month, General Motors had increased prices of all its 8 models between 1-2% due to adverse foreign exchange fluctuation. The last time companies had increased prices was in January at the start of the year as has increasingly become the norm.
Analysts however said there was no reason for a price hike at this time of the year and this was just an excuse to create more head room for discounts in the upcoming festive season. According to industry body Society of Indian Automobile Manufacturers (SIAM) prices of steel and aluminium have actually declined by 8-10% and 5% respectively between December 2014 and May 2015. Only rubber and polypropylene (thermoplastic) prices have firmed up by 4.4% and 8.4% respectively during the period.
"There is no justification for the hike," said an analyst with a leading consultancy firm who did not wish to be identified. "Steel copper and aluminium prices have been soft and more than offset the higher prices of rubber polypropylene and lead. Sales have been sluggish and this is just to ensure there is more room for discounts during the festive months."
After a great start to the year, sale of passenger vehicles declined in June for the first time in 8 months. Absolute volumes have remained stagnant from April to June, a worrying trend for the industry.