Higher costs drive up car prices

Plan panel deputy chairman Montek Singh Ahluwalia (left), heavy industries minister Praful Patel (centre) and Siam president Pawan Goenka in New Delhi on Wednesday. (PTI)

New Delhi, Sept. 7: Car prices are moving up at a time buyers are staying away on account of rising loan rates and fuel prices.

Higher input costs have forced Toyota, Mahindra & Mahindra to raise their sticker prices, while GM is contemplating a review.

Toyota will hike prices by 1.5-2 per cent from next month, while M&M has already raised them by up to 2 per cent from August. Both say the rise will be for all its models.

GM’s decision, too, will be for all its models; any change is likely to take effect from next month.

“Though there is a slowdown in the industry, raw material prices are still very high. We will review the prices of our vehicles this month, so that if we plan any hike it can be done in October,” said Karl Slym, president and managing director of General Motors India.

The company has already upped prices twice this year, in February and July, by 0.5 to 1.5 per cent, respectively.

According to the Society of Indian Automobile Manufacturers (Siam), sales of passenger vehicles, which include cars, vans and sport utility vehicles, fell 5.7 per cent in August, the second drop in two-and-a-half years.

Analysts said over the past few months, prices of key commodities, including copper, lead and rubber have increased 20-30 per cent.

“Because of rising component costs and appreciation of the yen, we will raise the prices most probably from October 1 by 1.5 to 2 per cent,” said Sandeep Singh, deputy managing director (marketing), Toyota Kirloskar Motor (TKM), the Indian unit of Toyota. The company has increased prices twice this year, in April and July, by a total 3 per cent. TKM produces the Etios and the Corolla Altis sedans, the Liva hatchback, Fortuner SUV and the Innova in India.

“Margins have been a concern as raw material prices were going up in the past. We hope that it will come down in the future. We last raised prices by 1.5-2 per cent,” said Vivek Nayer, senior vice-president (marketing-automotive sector), Mahindra & Mahindra (M&M).

This is the third price hike by the company in 2011. Earlier in January, M&M had raised prices by about 1.5 per cent, followed by another upward revision of 1.5-2 per cent in April.

The company sells utility vehicles such as the Scorpio and Bolero along with three-wheeler commercial vehicles. It also manufactures and sells sedan Verito.