Praful Patel in New Delhi on Wednesday. (PTI)
New Delhi, Sept. 4: Car makers are pressing on with their investment plans, banking on launches and exports, which benefit from a falling rupee, to overcome a sales slump.
Mahindra & Mahindra (M&M) will spend Rs 10,000 crore over the next three years on capital expenditure and in launching products. The company is scouting for locations to set up a new unit.
“In the next three years we will invest Rs 10,000 crore out of which Rs 7,500 crore are for capex on automotive and farm equipment and another Rs 2,500 crore investment will be on group companies,” Pawan Goenka, president (automotive and farm equipment), M&M, said.
“New products will be rolled out from a completely new plant, whose location will be decided within this fiscal,” Goenka said. The company will roll out cars both from M&M and SsangYong Motor, the South Korean firm it acquired in 2010.
Goenka said the company expected sales during the festive season to be better than July and August, but less than the last festive season.
He, however, ruled out any price hike saying the company had not been impacted much by the rupee depreciation because of a high incidence of localised components.
Tata Motors will go ahead with its planned investment of Rs 3,000 crore in the current fiscal, Tata Motors managing director Karl Slym said at the annual Siam convention.
The company is expecting a hike in car sales in the festive season but at a lesser scale than the previous years. “We expect to see a boom as we have always seen in this country in the festive season. But, looking at the trends, it will be lesser than last year,” Slym said.
Honda Cars India is also planning to continue with its investment plans of Rs 2,500 crore as announced this year.
“There is no change in our investment plans. In April we announced Rs 2,500 crore investment and it is on schedule,” Jnaneswar Sen, senior vice-president of Honda Cars India Ltd, said.
Some car makers are considering a hike in prices to offset the impact of the rupee depreciation
“Input costs are increasing so are the freight costs. The rupee depreciation has had an impact on our margins. We have been absorbing it for a while, but our capacity to absorb further is very less now. We are assessing the situation and contemplating to pass it on the consumers,” Ford India president and managing director Joginder Singh said.
Volkswagen said hiking prices was not an easy decision now, but they would have to raise rates soon. “At present, we are working out the amount of price hike and may take a final call around September 10,” Arvind Saxena, managing director of Volkswagen passenger cars, said.
Meanwhile, Praful Patel, minister of heavy industries and public enterprises, today said at the Siam convention that he would take a delegation of the automobile industry to Prime Minister Manmohan Singh and finance minister P. Chidambaram to discuss the possibility of a stimulus for the sector.