Maruti Suzuki not to increase prices despite rise in raw material costs  

Maruti Suzuki Ignis | Rs 4.90 lakh | The Maruti Suzuki Ignis is probably the funkiest looking car here, more so than the Magnite. It does have a tall-boy stance and very SUV like features but is priced at Rs 4.90 lakh and is classified as a hatchback.

Maruti Suzuki, India’s largest car maker, will not increase prices of its models for now, even as rising raw material costs are  chipping margins.

The Delhi-based maker of cars such as Swift, Baleno and Brezza has raised prices only once so far in 2018, while rivals Tata Motors and Toyota have hiked prices twice already.

R S Kalsi, senior executive director, Marketing and Sales, Maruti Suzuki said, “Our focus has always been the customer. Point is if there is a slight up or down in commodity prices then we always try to absorb and not pass on the customer. So we do not want to exploit the opportunity just because customers like our vehicles and there is a waiting on it and so we increase the prices. That’s not our policy as a company. Only when it becomes extremely necessary we go in for a price hike.”

In January, Maruti had raised prices by Rs 1700-17,000 across models, because of rising commodity prices, and increased dministrative and distribution costs.

Since then Honda, Hyundai, Mahindra & Mahindra, Skoda Auto, Isuzu and Renault have raised prices. Tata Motors raised prices in January followed by an another round in April. Toyota Kirloskar had also raised prices in January and will do so again this month.

Maruti models such as Swift, Dzire, Baleno and Vitara Brezza have seen strong demand since their launch with cumulative unserviced bookings swelling to 110,000 units across the four models. The company is ramping up production at its Gujarat facility to speed up deliveries and reduce waiting periods as high as two months for some models.

Ajay Seth, CFO, Maruti Suzuki, said, “Price increase impact was minimal on our margins whereas commodity cost impact was one percent. For the full year the commodity price impact was very steep. There has been Rs 700 crore impact more last year than the previous year because of the hike. Commodity costs has been bothering us for quite some time and if it wasn’t for the cost reduction technique we would have been very badly hit on margins. Directionally there will be pain. Steel is worrying. But we will discourage increase unless we are compelled”.

Maruti Suzuki sold  4.61 lakh vehicles in the March quarter, 11.4 percent higher than in the same period last year. Sales in the domestic market stood at 4.27 lakh units, 11.6 percent higher year on year, while exports came in at 34,691 units. It had given an average discount of Rs 13,880 during the quarter.