Rupee impact: Car makers to hike prices

Maruti Suzuki India on Thursday said it is considering an increase in prices of its products from January next year to offset the impact of rupee depreciation.

"Considering the amount of pressure that we are having on our margins due to currency fluctuations, we have to do something. We are looking at a price hike in January," Maruti Suzuki India (MSI) Managing Executive Officer (Marketing and Sales) Mayank Pareek said.

He, however, did not specify other details such as the quantum of price hike and whether it will be for the entire range of models or some select ones.

While small cars may become expensive by up to Rs 10,000, sedans are expected to cost more by Rs 20,000.

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PTI & Agencies

Talking about the impact of the weakening domestic currency, MSI Chairman R C Bhargava said: "The impact of the declining rupee and strengthening yen is that any import which is yen denominated becomes very expensive for us."

He said compared to about 50 paise per yen last year, the exchange rate is over 60 paise now.

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MSI has both direct and indirect exposure to foreign currencies while importing components. It imports about Rs 8,000 crore (Rs 80 billion) worth of parts annually.

Last month, MSI hiked prices of its diesel cars by up to Rs 10,000 on account of higher input costs and appreciation of the Japanese yen.

It raised the prices of diesel versions of compact cars Ritz and Swift and sedans DZiRE and SX4.

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Other car-makers, including General Motors India and Toyota Kirloskar Motor, are also mulling a hike in prices of their products to offset the rising cost of component imports due to the depreciating rupee.

These firms are at present evaluating the quantum of price increase to be effected.

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The rupee depreciation will force auto bigwigs like Honda and Skoda also to hike prices.

Rupee depreciation is putting severe pressure on companies that import a substantial amount of components from overseas.

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While BMW has already hiked prices, luxury carmaker Audi is also planning to hike car prices.

The domestic currency was being quoted at Rs 51.80 per US dollar in morning trade on the Interbank Foreign Exchange on Thursday.

The slump in the rupee comes at a time when auto-makers are witnessing a slowdown in demand.