Maruti Udyog to hit the price hike trail

Come 2005, passenger cars will become dearer in the country. In a communication to its dealers, market leader Maruti Udyog Ltd (MUL) today said prices would go up by Rs 5,000-Rs 20,000 across all its brands including Maruti 800, Omni, Esteem and Baleno with effect from January 1, 2005.

Maruti had last increased prices by about 0.38 per cent in August 2004 when the government levied a 2 per cent education cess in the Union budget. Prior to that, in January 2004, Maruti had increased prices of its models by 0.2 per cent to 0.75 per cent owning to increase in input costs.

Maruti's communication comes close on the heels of other auto majors such as Ford India, General Motors India (GMI) and Hyundai Motor India (HMI) announcing similar price hikes to absorb the increase in prices of steel, plastic and a weak dollar.

HMI had in the first week of December 2004, announced a price hike of Rs 7,000-8,000 on its star model Santro and Rs 6,000 on the Accent Gle, with immediate effect.

An HMI executive said that the Korean car market had last increased price hike of Santro and Accent almost 18 months ago. GMI had also earlier announced 1 to 2 per cent price hike on Optra and Travera, citing an increase in inputs costs.

A GMI spokesperson said the hike would, however, absorb only a part of the input cost increase. Ford India too is increasing the price of Ikon Flair by Rs 5,000 and up to Rs 15,000-18,000 on the Ford Endeavour.

The price hike by both Ford and GMI will take effect from January next year. Vinay Piparsania, vice-president, sales, marketing and service, Ford India, said, "Purely from an administrative point of view the price hike at the beginning of the year or the month makes it a lot easier to manage."