Besieged by rising steel prices, the domestic passenger car manufacturers are gearing up to raise prices again.
Barely a month ago, Maruti Suzuki, Hyundai Motors India, Mahindra & Mahindra, Tata Motors and Honda Siel had effected price increases of Rs 6,000 to Rs 30,000 across models.
The price of alloy steel, which constitutes about 40 per cent of a car, has been rising incessantly, registering a hike of more than 20 per cent or Rs 3,000 per metric tonne in the last one month alone in spite of the government's exhortations to steel makers to hold prices. The prices of other key ingredients -- copper, aluminum, rubber -- have also been rising.
A highly competitive marketplace has allowed car makers only limited price flexibility, forcing them to absorb the rise in raw material prices.
A senior executive of Mumbai-based Mahindra & Mahindra confirmed that the company was evaluating prices, though no date had yet been fixed to raise them. A spokesperson for Hyundai said: "The company has not taken any step to raise prices immediately again but will look at it." A Tata Motors spokesperson, however, said the company did not provide guidance about prices.
Industry analysts said the quantum of increase in raw material prices in the last few months was much more than what had been passed on to car buyers. "Manufacturers couldn't have risked a sudden increase of 6-7 per cent at one go earlier. Hence it was decided to increase prices in a phased manner," said a Mumbai-based auto analyst.
The price rise has been proposed at a time when the industry is in the throes of a sales slowdown made even more acute due to the recent excise duty increase of Rs 15,000 on cars with engines bigger than 1500cc but up to 1999cc and Rs 20,000 with engines more than 2,000cc.
The government's decision to increase petrol prices by 10 per cent and diesel prices by 7 per cent has also applied the brakes on an industry already plagued with rising interest on consumer finance.
