Car prices set to rise again

In spite of a sluggish market, car makers are set to raise prices of their products in India for a third time in 2014. While there has been a cut in excise duty, manufacturers claim that an unstable Rupee and rising operational costs have squeezed their margins and made it difficult for them to function.

Mahindra, Tata Motors, Honda Cars India and Renault India are expected to hike prices next month. Others like Maruti Suzuki, Hyundai Motor India and Ford India are said to be considering a price hike as well. Companies claim that the weak rupee has made import of critical components costlier and rising fuel prices and other overheads have raised their operating costs. This in turn, has made them increase the prices of their products.

In a bid to revive the flagging automobile market, the Government of India announced a cut in excise duty by as much as 6% on automobiles last month. Many manufactures slashed prices of their products to pass on the benefit of the reduced duty to the customers. Price drops of Rs 10,000 - Rs. 5,00,000 were seen on various models. However, the market did not show any signs of a revival. In fact, total sales of passenger vehicles fell by 4% in February. During the April 2013 - February 2014 period, passenger vehicle sales have fallen by 6%.

Source: ET Auto