Mumbai: The Indian arms of global car makers Toyota Motor Corp., Honda Motor Co. Ltd and General Motors Corp. are raising prices of some models from January, citing the sharp fall of the rupee against the dollar in recent months.
Other car makers have also indicated raising prices next month. Toyota Kirloskar Motor Pvt. Ltd announced on Wednesday that it will increase the price of its Innova and Corolla Altis models by up to Rs25,000 from 1 January.
Executives of Honda Siel Cars India Ltd and General Motors India Pvt. Ltd told Mint their companies would also be raising prices of their cars from January.
Cost pressure: The Corolla Altis at its New Delhi launch, The firms say they can no longer absorb the costs. Saurabh Das / AP
The decision comes less than two weeks after auto makers reduced prices for cars, after the government cut excise duty by 4% on 7 December.
“We have been absorbing the additional cost incurred due to currency exchange for some time now,” said Sandeep Singh, Toyota Kirloskar’sdeputy managing director, marketing.
“With exchange rates going up much beyond our expectations in the last three months, we don’t have a choice but to increase the prices.”
The rupee hit a record low of 50.65 a dollar in early December, but has since strengthened on the back of interest rate cuts by the Reserve Bank of India and the government’s stimulus package. On Wednesday, the currency closed at 48.06 against the dollar, losing more than 18% this year.
Jnaneswar Sen, vice-president, marketing, Honda Siel Cars, said the company plans to increase the price of its CR-V utility vehicle by at least Rs1 lakh from 5 January. Honda imports CR-V from Thailand.
P. Balendran, vice-president, corporate affairs, General Motors India, said the company will increase the price of all its cars in the country in the first week of January by 2-3%, both to withdraw recent discounts and because of the weakening of the rupee.
“We are withdrawing the discounts that have been extended from November-end till December,” he added.
Mahantesh Sabarad, an analyst with Centrum Broking Pvt. Ltd, said that in a market where sales are already depressed, price hikes would only add to the erosion.
“Battling a cost pressure through price hikes would not help them (manufacturers) as the topline (revenues) would suffer because of lower sales,” he said.
Hyundai Motor India Ltd and Maruti Suzuki India Ltd, which make most of their car models locally, are not hiking prices in the near future, officials of these companies said.
The executives, however, said their margins are under pressure and they may have to review the prices in January.
“We have just brought down prices of all our models and haven’t looked at a price hike as yet,” said Ashok Jha, president, Hyundai Motor India.
“Pressure on costs continues and we don’t know how long we would be able to sustain the prices at this level,” said Puneet Dhawan, spokesman for Maruti Suzuki.