Maruti to hike car prices, increase focus on diesel cars

Auto industry body SIAM has lowered its auto sales growth forecast for FY13 to 0-1 percent, but warnings of sluggish demand is not stopping Maruti Suzuki from hiking prices or going in for new launches. CNBC-TV18’s Sunanda Jayaseelan reports from Mumbai.

Traditionally, January is the month carmakers hike prices and India's largest carmaker seems to be a stickler for tradition. Sources say Maruti is taking a leaf from M&M's book and is set to hike prices by between 1-1.5 percent across products by the end of the week.

Also Read: Maruti dips 1.8% after scales down market share guidance

In CNBC-TV18 exclusive, Maruti chairman RC Bhargava refused to comment on price hikes. But he did confirm that new launches will continue, despite the sense of continued sluggish demand, especially for petrol vehicles.

“I think all petrol cars are going to remain under pressure. A new model like the Alto 800 or the Alto K10 is doing a little better. But, as far as the industry is concerned and Maruti is concerned, I do not think petrol cars are going to show any growth at all,” adds Bhargava.

With petrol variants facing an uphill drive, Maruti is also increasing its focus on diesel engines. It plans to increase diesel engine capacity at its plants by 1,50,000 by September this year and thus rein in a slipping market share.

Further Bhargava says, “At the moment I think 40 percent target is what we are aiming to get at the first step, when we increase diesel capacity further and if the whole environment changes.”

In the short-term, however, Maruti is banking on a strengthening Japanese yen to ease margin pressure and end FY13 on a firm note.