Mahindra may increase car prices due to rising input costs

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Mahindra & Mahindra (M&M) may increase prices for its products in the coming months due to rising input costs. This was stated by Dr Pawan Goenka, President (Automotive Sector), on the sidelines of SIAM's Environmentally Friendly Vehicles summit on Monday.

"We will try and not increase prices in the third quarter, while absorbing increases in the input costs. But if they go up as much as last year, we will have to pass it on to the consumers," he said.

Though he declined to comment on the timing or the magnitude of the possible price hike, Dr Goenka said, "Yes, we are feeling the pressure and all companies are feeling it."

Dr Goenka added that in the second quarter, the company had posted margins which have been "one of the best in many years", but said it would be difficult to maintain the same kind of margins in the third and fourth quarters because of the increase in prices of rubber and sheet metals.

"July-September quarter was our best in terms of profit margins. It would be difficult though to maintain them at that current level," he said. "If nothing changes like the excise duty or the commodity prices, I see double-digit growth for the industry in the next six months. However, if stimulus is withdrawn the growth will be lower," said Dr Goenka. M&M had posted a profit margin of 18.2% in July-September quarter.

Dr Goenka, who is also the President of SIAM, added that the industry association was working with four-five companies on developing hydrogen-CNG dual fuel technology for commercial vehicles such as autos and similar three-wheelers. "This project is in the pilot stage and it will lead to development of a more efficient fuel. This will have 15% hydrogen," he said.

When asked about the market for electric vehicles (EVs), he said that the main problem was the development of supporting infrastructure. "I don't see EVs being popular in the short-term," he said.

Pilot project

M&M is also running a pilot project with an NGO called Earth100, for the development of vehicles running on 100% biodiesel.

The programme, which started two-three years ago, has 8-10 Scorpios under testing.

Taken from Business Line