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Pincer Squeeze: Get ready to shell out more for cars

As rupee drives up costs and sales plunge, Indian auto companies are left but to weigh the pros and cons of a mid-year price revision and hike prices. Mahindra & Mahindra has already hiked prices of their offerings. HT reports.

india Updated: Jul 08, 2013 11:46 IST
HT Correspondent
HT Correspondent
Hindustan Times

Car makers, squeezed between depressing sales and a plunging rupee, are weighing the pros and cons of a mid-year price revision.

A section of automobile manufacturers such as Mahindra & Mahindra (M&M) and General Motors (GM) have already hiked prices of their offerings. Major mass market players Maruti Suzuki and Hyundai are yet to make their move, but are likely to follow suit.

Auto makers say that though global commodity prices have cooled, Indian manufacturers are not benefiting due to the rupee depreciation. In many cases, raw material costs have actually gone up.

Low economic growth, inflation, high interest rates and fuel prices have led to a sustained fall in car prices for the past 10 months.

GM vice-president P Balendran said that logistics costs have added to the cost bite. “We do not see a reversal of this trend any time soon,” he said.

M&M increased the prices of all its vehicles barring XUV and Rexton by Rs. 3,000 to Rs. 6,000 early this month. GM raised prices by 1.5% in June, making its popular models Spark, Beat and Tavera pricier by Rs. 5,000, Rs. 6,000 and Rs. 10,000 respectively. This month, its latest utility vehicle, Enjoy, became Rs. 10,000 costlier.

“In adverse market conditions volumes and margins are under pressure. The rupee depreciation has added to that pressure,” said Rakesh Srivastava, vice-president, sales and marketing, Hyundai Motor India. “We are studying the impact and will make a considered decision.”

A Maruti spokesperson said the company would be taking a call on a price hike.

Among luxury car players Audi will increase prices in a month or so, while Mercedes Benz is ‘studying the situation’.

Tata Motors and Nissan said they do not plan to raise prices of their models. Kenichiro Yomura, chief executive officer, Nissan India, said the 88-90% indiginisation of parts have helped it offset the impact of the rupee fall.

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