The Telegraph
Friday , December 7 , 2012
Since 1st March, 1999
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Cars set to be costlier

New Delhi, Dec. 6: Car makers plan to raise prices by 1-2 per cent next month to neutralise the impact of increased input costs and currency fluctuations.

Passenger car sales have been on a downward trend this year mainly because of higher loan rates and rising fuel prices that have hit demand.

Maruti Suzuki India today said it would increase prices by up to Rs 20,000, while Toyota Kirloskar Motor and General Motors will hike prices by 1-3 per cent across all models.

Other companies, including Honda Cars India and Volkswagen India, said they were also discussing similar hikes to compensate for increasing pressure on margins because of currency fluctuations and strengthening of raw material rates.

“There will be a hike in the prices of our products. The quantum will vary depending on models, but it can be up to Rs 20,000,” said Mayank Pareek, chief operating officer (marketing and sales), Maruti Suzuki India.

At present, the company sells a variety of models from the M800 to the imported Kizashi at a price range of Rs 2.09 lakh to Rs 17.52 lakh (ex-showroom Delhi).

Toyota Kirloskar Motor also said it would increase prices across all models from January by 1-2 per cent.

Toyota sells a range of vehicles from the hatchback Etios Liva, with prices starting at Rs 4.44 lakh, to imported sports utility vehicle Land Cruiser, which carries a tag of Rs 99.27 lakh (ex-showroom Delhi).

“We will increase product prices in January across all car lines ranging from 1 to 3 per cent depending on models owing to the currency fluctuation and hike in input costs,” said P. Balendran, vice-president, GM India.

Honda Cars India said it was considering raising prices, but details were yet to be finalised.

A spokesperson for Volkswagen Group Sales India said: “With increasing pressure on input costs and exchange rates, Volkswagen is considering a price hike.”

Premium car maker BMW also recently announced it would increase prices by up to 10 per cent from January. The German auto maker has a host of models in India at price points starting from Rs 24 lakh for the X1 to Rs 88 lakh for the X6. Its 3 and 5-Series fall in the Rs 30-60 lakh price range.

Analysts said these were pressure tactics to ensure customers did not delay making buying decisions in December, which sees sagging sales because of the year-end.

Industry players said price hike announcements were also made during the later part of 2008 when the sector faced a slowdown. However, these were not enforced until the end of that fiscal because of a continued weakness in demand.