Cars, utility vehicles may cost more from January
According to industry insiders, carmakers are now offering higher discounts to bring in buyers.
Toyota Kirloskar Motor (TKM), a joint venture between Toyota and the Kirloskar Group, on Tuesday said it is considering raising prices of its vehicles by up to 4% from January 1, while Ford India said it is looking at hiking vehicle prices by 1-3% due to an increase in costs on the back of rupee depreciation.
Honda Cars said the company is reviewing the situation and is yet to take a final decision regarding raising vehicle prices, while Hyundai Motor India and Tata Motors said there is no decision to increase vehicle prices as of now.
Vehicle makers in India have been struggling to grow volumes in recent months due to an increase in fuel costs, interest rates and upfront insurance costs. Passenger vehicle sales in the domestic market declined year-on-year for three months till September, before rising by 1.6% in October.
Carmakers are now offering higher discounts to bring in buyers, industry insiders said.
“While margins are under pressure, announcements related to price hikes also tend to help buoy year-end sales,” said an industry observer who did not wish to be identified.
Data compiled by Federation of Automobile Dealers Association (FADA) shows retail sales of vehicles dropped by 11% year-on-year in the 42-day festive period from Navratri to Diwali this year. TKM said the company considered a price hike after periodically reviewing the continuous pressure of increasing manufacturing costs, which is a general industry phenomenon.
“There has been an impact on the cost of manufacturing of vehicles primarily due to rupee depreciation,” the company said in a statement. “Toyota has been absorbing the additional costs all this while, protecting the customers from price increase. However, due to the continued pressure of high costs, we have to pass on a part of it to customers.”
TKM currently sells a range of vehicles starting from hatchback Liva to luxury SUV Land Cruiser, priced between Rs 5.5 lakh and Rs 1.4 crore.