Amid market uncertainties and increasing manufacturing cost, German luxury car maker Mercedes- Benz has made a decision, following General Motors and Audi, to go for a price hike for its entire model range available in the Indian automotive market. The decision was made public when the company said that it is going to hike prices by up to 4.5 per cent from 1st September, 2013. This anticipated hike, made for the company's entire model range, is a setback for domestic buyers for they have to bear the extra cost to purchase their favourite model. As per the information available, the decision of price increase has been taken due to continuous depreciation of the Indian rupee against the US dollar, higher import duties and increasing input cost.
The revised price of the various models available in the Indian automotive market is going to be in a range of 2.5 per cent to 4.5 per cent. Now with the latest price hike, Mercedes-Benz's new A-Class 180 CDI luxury compact car will be sold at a starting price of Rs. 22.05 lacs, with an increment of 4 per cent. The cost of the B-Class 180 CDI model will see an increase of 4 per cent and will now cost Rs. 23.50 lacs. On the contrary, the C-Class 200 CGI sedan with a marginal 2.5 per cent hike in selling price will come at a cost of Rs. 32.25 lacs. Coming back to the newly launched E-Class 200 CGI saloon, with a hike of up to 3.5 per cent, it is going to cost Rs. 42.16 lacs. The sports utility vehicle ML-Class 250 CDI will cost Rs. 50.98 lacs following a hike of 4 per cent in cost (all prices are ex-showroom Mumbai).
Referring to the price hike, Mercedes-Benz India Managing Director and CEO Eberhard Kern said, "The rising input costs along with higher import duties have been creating significant pressure on our bottom lines for quite some time now. The constant weakening of the currency and the increase in other relevant taxes further impacted the business, adversely." He indicated that company, so far, has tried its best to absorb these impacts, but now it is quite hard to sustain such ongoing impacts seeing increased input costs and continued depreciation of Indian rupee in the international market. So, in order to sustain business and maintain profitability, the decision to go for a price hike seemed to be pretty inevitable.
Replying to a question that if Indian currency continue to slide against the dollar, would the company go for a price hike again, Kern said, "The price hike that we are undertaking does not cover the impact of the current exchange rate hit and if this continues we will have to have a re-look at the pricing. We are hoping that the exchange rate returns to a reasonable level."
Earlier in August 2013, General Motors India went on to declare price hike of its three models by up to Rs. 10,000 effective from first week of September. The decision was attributed to incline with a sharp depreciation of Indian currency against the US dollar. Also, BMW group also announced the price hike of its products across models by up to 5 per cent. Audi, somewhere in July 2013, hiked prices across its models available in India by a margin of up to 4 per cent in order to mitigate the impact of rupee depreciation and increasing input costs. As per the current situation, the continuous free fall of Indian rupee in the international market is adversely impacting companies that import products and parts to India. So, it is quite likely that other car manufacturers may also make similar announcements soon.
