After deep discounts in Dec, car prices to go up from Jan

Moneycontrol Bureau

Passenger car makers offered huge discounts in December, as much as Rs 60,000-70,000, to attract buyers, in what has been a year full of speed breakers for the industry. But if you haven't bought your car yet, get ready for price hikes from January.

Many car makers out there, Indian and multi-national, have announced price hikes in the range 1-3% from Jan 1.

December is typically a month, where passenger car companies offer discounts to clear out the excess inventory with them and their dealers, before new year models are launched from January.

Discounts were quite higher than usual in December 2011 though, as passenger car companies tried in vain to attract customers, many of whom have deferred purchases as loans became expensive and fuel prices, especially petrol, shot up through the year.

But with high input costs chipping away at margins for last few quarters, analysts say, the companies had little choice but to raise prices. The recent depreciation in rupee has only made the road more bumpy, as it has made importing raw materials and auto components more expensive.

Utility vehicle maker Mahindra & Mahindra, for instance, has said it will raise prices by up to 3% depending on the models. It is also raising price of its newly launched XUV500 sports utility vehicle by Rs 50,000-55,000 from the new year.

"This price rise has been necessitated as the launch price was an introductory invitation price and there has also been a considerable impact of increase in raw material costs and the rupee depreciation with respect to dollar & euro," the company said.

However, the company has said that customers who have already booked but are yet to get their XUV500 delivery will only have to pay 50% of the actual price increase.

Among other companies, India's second largest passenger car maker, Hyundai Motor India, is to raise prices by 1.5-2%, Toyota Kirloskar will hike prices by 1.5-3%, Ford India will up prices by 2-3% and Japanese Nissan will increase price of its Micra and Sunny by 2%. General Motors India is also increasing prices by 1-2% come Jan.

India's top car maker Maruti Suzuki and Tata Motors haven't announced price hikes yet.

A study by industry body Associated Chambers of Commerce and Industry said this week that car companies could increase prices by as much as 10% in first half of 2012.

"To make up for the losses incurred due to discount offers and inflationary pressures resulting in sharp rise in lending rates for car loans by banks, the Indian automakers are all ready to hike prices of their passenger cars by one to nearly 10% in the first half of the next year," said DS Rawat, Assocham Secretary General.

Nachiket Kelkar
nachiket.kelkar@network18online.com