Major automotive companies — Toyota, BMW, Mahindra and Mahindra — are looking to increase prices next year, despite an overall dull sales performance in the festive season this year.
Toyota, on Tuesday announced that it will increase the prices of vehicles across models by up to 4 percent from January 1. It cited rupee depreciation and the increase in manufacturing costs as some of the reasons. The company considered the price hike after periodically reviewing the continuous pressure of increasing manufacturing costs, which is also a general industry phenomenon.
According to a Motilal Oswal report, over the last three months, the demand has been extremely poor owing to 15 percent increase in fuel prices, 100 percent jump in insurance cost and 50 basis points (bps) rise in interest rates. One basis point is a hundredth of a percentage point.
Another auto major Mahindra and Mahindra announced increase in the price of its newly launched Marazzo but did not explicitly mention the reason.
"As mentioned at the launch, the price of Marazzo was an introductory one. Effective January 1st 2019, we will be taking a price hike on the Marazzo, after a reasonable period of 4 months from its launch," said Veejay Ram Nakra, Chief of Sales and Marketing - Automotive Division, Mahindra & Mahindra.
The company said that it will increase the price by Rs 30,000 to Rs 40,000.
Earlier, German luxury car maker BMW said that it was planning to raise the prices in India by up to 4 percent from January next year. The company didn't mentioned any specific reason behind the move.
The overall car sales in the industry were merely increased by 1.6 percent in October. The figure is around 2 percent for September and October combined. The fiscal-to-date (April-October) growth is just six percent, according to the Motilal Oswal report.