Indian Auto makers is forced to increase car prices

Auto makers in India are forced to increase their car prices up to Rs 20,000 in a month or so since the raw material cost has moved up by 10 to 15 per cent along with rise in yen valuation. New emission norms are also forced car companies to hike the prices of popular car models in India like Honda Civic, Maruti Swift and Mahindra Scorpio. Mahindra and Mahindra chief Pawan Goenka said that steel and metal prices are under pressure and the suppliers of these are indicating price increase from quite sometime thereby they need to increase prices to maintain healthy profits. Maruti Managing executive officer Mr S Maitra said that its raw material prices must be 5 to 7 per cent more than the first half of the FY 09. However, final decision is to be taken with suppliers. In the same way, imported vehicles are also expected to be having increased cost due to the recent fluctuations in the Japanese currency-yen. As a result, likes of Honda and Toyota are having a close look on the recent development. It is to be mentioned here that car prices in India were increased in January last and the second session of hike will be seen in April 2010 when new emission norms will come into force. As a result, to upgrade a car compatible to new norms will cost Rs 5,000 to Rs 15,000 thereby price hike. This new price will be more for bigger four wheelers. In the first phase of switching over to new emission norms, only eleven major metros, Mumbai, Delhi, Chennai, Bangalore and Hyderabad, will be included where more than 65 per cent new cars in India are sold. It is also expected that the yet-to-be launched cars in India, Volkswagen Beetle and Volkswagen Polo, would have increased prices.

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