Maruti considering a hike in prices to negate the effects of falling rupee

Saturday 03 December 2011, 11:22 AM by

Maruti Suzuki India Limited (MSIL) has knocked the doors of its last resort, though after turning interminable stones in the recent times, which would eventually trickle down the ill-effects of the declining rupee to its customers. Recently, the company informed that a hike in prices of its vehicles is on the cards and the populace would possibly witness the escalation from January next year.

"Considering the amount of pressure that we are having on our margins due to currency fluctuations, we have to do something. We are looking at a price hike in January," Maruti Suzuki India Managing Executive Officer, Marketing and Sales, Mayank Pareek stated.

Maruti considering a hike in prices to negate the effects of falling rupee | CarTrade.com
Maruti

However, a detailed disclosure regarding the price hike in the coming time was not a part of Pareek's statement. He was not precise as to whether the revision would be for the entire range of models or few selected ones.

Discussing over the critical issue of weakening domestic currency and its adversities, MSIL Chairman R.C. Bhargava said, "The impact of the declining rupee and strengthening yen is that any import which is yen denominated becomes very expensive for us." He added that as against the 50 paise per yen during the previous year, the exchange rate has surpassed 60 paise at present that is alarming for economy.

As a matter of fact, MSIL has been dealing with foreign currencies both directly and obliquely, at the time of importing components. It procures parts worth Rs. 8,000 crore from outside India, on an annual basis.

Indicating its intentions some time back, the MSIL raised the prices of its diesel cars to the tune of Rs. 10,000, owing to the exorbitant input costs and the appreciation of the Japanese yen. It is important to note that the diesel variants of compact cars Ritz and Swift, along with sedans DZire and SX4 witnessed a revision in their price tags.

General Motors India and Toyota Kirloskar Motor are also likely to join the league, as they are contemplating to ascend the prices of their models, in view of the untamed cost of imports. These car manufacturers are in the process of fixing the amount of weight it would exert on the prices of its diesel-run products.

The weak sentiments accompanying rupee is proving to be a rope in the neck of car companies that bring-in significant quantity of components from overseas.

The collapsing rupee has added to the woes of the auto makers, which are already facing a deterring laxity in demand.

As a matter of fact, MSIL encountered a faltering sales for the six months back to back, including November, wherein the firms latest report suggest a 18.46% fall in sales to 91,772 units.

Thus, the Maruti customers would a facing a 'like it or lump it' situation and seeing the market trends persisting at present, the company has to implement the risky decision at any cost.

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