Car buyers who are already bearing the heat of the highest ever hike in the price of petrol will now face another shock. In order to get less affected by the rising input costs and devaluating rupee, Car companies are looking at another price hike.
If the companies indeed raise the price of the car models, it will be the third hike this year. The automotive sector in the country, which had witnessed the lowest sale in last 10 years at 3 per cent in April 2012, has been struggling with constant hikes in fuel price and incessant price.
According to the car makers, they have no other option than to raise the price of the car since they cannot deal with the Forex fluctuations and soaring import tariffs. With Toyota Kirloskar Motors and General Motors India planning to raise the price in near future, companies like Maruti Suzuki India and Hyundai Motor are in tow as well.
Sandeep Singh, Deputy Managing Director, Marketing, Toyota Kirloskar Motors, said, "We have been facing cost pressures over the last few months and have decided to hike the prices. The quantum is yet to be finalised, but the hike should come into effect from June."
General motors, which had earlier decided to make raise the price of its cars from June 1st is now again reconsidering its decision due to the recent hike in price of petrol. P. Balendran, Vice President, Corporate affairs, General Motors, stated, "We are re-considering plans to increase prices from June as customers are hit by the massive increase in the prices of petrol. We do not want to create a double whammy for customers and are planning to postpone the hike till the conditions improve in the domestic market."
In January 2012, car manufacturing companies had increased the price up by 1.5 per cent to 3 per cent. However, the real impact followed the Union Budget declaring 2-5 per cent hike in excise. The price of premium luxury segment increased by up to Rs. 5 lacs while the smaller hatchback’s price went up by up to Rs. 6,000 causing the sales to come down to 1,68,351 units during April.
With the potential customers cancelling their bookings, the automotive companies remain unsure about the opportunities in the auto market in the country. The largest car maker in the country, Maruti Suzuki too is considering its options. Senior Executive from the company said, "There are intense cost pressures with regard to import of important commodities like steel due to currency and other reasons.”
According to the market analysts, the automotive industry, which is already crawling under the impact of price hike will be affected further with another hike. According to a Mumbai-base analyst belonging to a brokerage firm, "The market is already reeling under the price of petrol price hike, which has further dampened the sentiment after the Budget hike. Now another hike will hit the industry hard."
