Economic crisis around the world does not seem to be over. Car industry in India faces new challenges as Rupees continues to weaken against dollar. Several car manufacturers import their cars in India as Completely Built Units or CBUs. All the imported cars continue to get more expensive against the depreciating Rupee value.
Major luxury car makers are few of the prime car makers that are forced to absorb losses due to depreciating Rupee. Mercedes, BMW, Honda, Nissan, Volvo, Porsche need to revise their car prices in order to balance their books.
“No decision has been taken yet to increase prices at the moment but we are watching the situation closely and will take a call later,” says Neeraj Garg, Director, Sales and Marketing, Nissan Motor India.
Prices would be revised with an upward margin which has become necessary especially luxury car makers who import their cars due to absence to manufacturing or assembly plants in India.
"We are aware of the volatility in exchange rates and are trying to cushion the impact on customers. We have a buffer demand available and is enough to last for some time. The question will be how long we will be able to continue to take hit on margins,” said a Daimler spokesperson.
Volvo is also concerned about the depreciating Rupee value which has seen weakening of nearly 18 percent against the dollar since the start of the year. The duty structure already double the prices of the car as imported cars attract 114 percent duty including customs duty, excise duty, and other surcharges. Volvo does not have any manufacturing unit in India and makes company worried as it sees a healthy growth in demand for its cars. However, if the company keeps on hiking the prices, it may affect the demand adversely.
