For all those who were planning to buy a new car in 2012, the deal just got more expensive for them. This news is in the wake of the continually depreciating value of the Indian Rupee in the international market, auto manufacturers have decided that car prices will be increased in coming times.
Rising import costs have compelled the Indian subsidiaries of car makers like Maruti Suzuki, Toyota and General Motors to contemplate a hike in rates despite average sales. Therefore, buyers can expect their favourite vehicles to get dearer by Rs. 5000-50000, depending upon the model.
Auto manufacturers that import inputs for their vehicles bear the brunt of this fluctuation in currency valuation. Maruti Suzuki, India's leading car maker, alone incurs an import bill of Rs. 8000 crores for parts and any rise in the value of cars will hit the company quite hard.
The leader of the pack, in this case, is Maruti Suzuki, which has decided to raise the price tags of its diesel vehicles by Rs. 2000-10000 come January 2012.
Toyota Motors have also said that their customers will feel the heat of this trickle down effect. Sandeep Singh, Deputy Managing Director (Marketing), Toyota Kirloskar Motor (TKM), commented, "For the last three months, we have been absorbing the pressure of currency fluctuations. Now we have decided to pass on some burden to customers. We will raise the prices by 1.5 to three per cent from January 1."
Though no figures were disclosed by the company, the rise may be as much as Rs. 50000 for Fortuner, Toyota's Sports Utility Vehicle (SUV). If put into effect, this will be the single biggest price raise enforced by the company upon buyers in the past few years. Singh said, "The company will increase the prices of all vehicles manufactured in India and the quantum of hike will vary from model to model. The new rates will be finalised by the third week of this month."
The impending price hike will be the fourth one in 2011 as Toyota, General Motors and Maruti Suzuki had already augmented prices in April, July and October this year, pushing the rates up by 5 per cent.
Singh quipped, "Generally we raise prices by one to two per cent. However, the impact of rupee depreciation and yen strengthening is so much this time that we have to undertake such a steep hike."
While these three manufacturers have already put their plans into place, other car makers are also pondering over the same. Honda Siel is thinking about increasing costs to offset its financial burden, while Volkswagen and Hyundai are assessing the conditions and may make a decision by next week.
According to a senior General Motors official, "The rising cost and fresh depreciation of currency is already putting pressure on the margins. Despite the steep competition and slowing sales numbers, companies cannot contain the pressure anymore."
As per industry experts, this hike will keep the customers away from showrooms. "If year 2011 was not so good in terms of sales, the initial few months of next year is going to be worse for auto makers as competition will be steep and margins will be thin.", said a senior Volkswagen executive.
Though low cost passenger cars makers have been worst hit by this situation, even high end car manufacturers, such as Audi and BMW, may end up revising their prices from January.
