More price hikes on the way; rising costs of steel and rubber to blame this time

Posted by Harry on June 29th, 2010 | No Comments

Be prepared to shell out more for your dream set of wheels

The Auto Industry is certainly facing a lot of hurdles these days. There were three round of price rise followed by two rounds of hikes in fuel prices and a fourth hike has already been executed. So, that’s four hikes in automobile prices and two hikes in fuel prices since January 2010. GM, Ashok Leyland and Bajaj have gone ahead with their hike already while Maruti Suzuki, Tata Motors and Toyota Kirloskar are soon to pass on rising input costs to customers.

January saw the first hike due to rising input costs followed by a two percent rise due to excise duty hike. Later, the implementation of BS-4 norms led to the third hike followed by a fourth round due to rising input costs, mainly stlee and rubber. Similarly, fuel prices were hiked due to the implementation of BS-4 norms while the most recent hike was due to de-regulation of fuel prices. Ashok Leyland have increased prices of CVs by Rs 20,000 to 50,000 while Hero Honda and Bajaj have hiked their two wheelers by up to Rs 1000.

Maruti Suzuki India Managing Executive Officer (Marketing and Sales) Mayank Pareek told PTI

“Raw material prices are increasing day-by-day and it is affecting us… Our margins are under pressure,” “We are in the process of finalising our contracts with our suppliers and any decision on price increase will be taken after that,”

General Motors Vice-President P Balendran said the company will hike the prices by up to 2 per cent from July 5.

“Prices of raw materials, mainly steel and rubber, have risen sharply since the second quarter of last year… We are forced to increase prices this time,”

When contacted, a Toyota Kirloskar Motor spokesperson said

“We review our prices every quarter and it is expected to happen by the end of this month or early next month. Only then, we will be able to announce any hike in prices.”

Ford are also evaluating similar options. The prices of rubber have gone up by 25% over the last one year.