Maruti Suzuki India (MSIL), the country’s largest car manufacturer, has increased prices by up to Rs 8,000, except for its newly-launched compact car Alto K10, to combat rising input costs.
“Material costs amount to 80 per cent of the cost of production of a car. Increase in input costs puts pressure on profitability. We have tried to absorb the rise in costs to the extent possible, but now we had to pass it on to the consumers,” said Shashank Srivasatava, chief general manger, marketing.
MSIL raised prices across models between 0.5 and 2.2 per cent, which will be translated into a jump between Rs 1,000 and Rs 8,000. The change will be effective from Monday.
Last month, the company had admitted that input costs of commodities have become unbearable. “The price of natural rubber, which used to be Rs 100 per kg, has gone up to Rs 200 per kg. Copper price has increased by 12-15 per cent and steel has also seen a similar increase,” said Mayank Pareek, managing executive officer (sales and marketing).
Earlier, while announcing the results for the quarter ended September, the company had admitted that profit margins were under pressure due to an increase in commodity prices. MSIL had reported 4.95 per cent increase in net profit at Rs 598.20 crore for the quarter. The cost of consumption of raw materials and components had gone up to Rs 6,938.9 crore during the quarter from the earlier Rs 5,254.9 crore. It had revised price twice in the last financial year.
Tata Motors, too, effected a price rise from January. While the company increased the prices of passenger cars between Rs 3,000 and Rs 15,000, for commercial vehicles the price rise is between Rs 1,500 and Rs 30,000. Mahindra & Mahindra has indicated that it, too, would raise prices this month, the quantum, however, yet to be announced. General Motors had indicated early last month it would raise the prices of its products by 1.5-2.5 per cent mid-January onwards, while Volkswagen has increased the price of its small car, Polo, by 2.9 per cent with effect from this month.
