The Indian auto industry is bracing itself for increasing prices in the lead up to the festive season, as the increasing cost of commodities drive up the production cost of vehicles.
The increasing production cost could end up affecting customers as automakers will face a challenge to maintain current price points and maintain their current profit levels as well.
Prices of essential commodities for the automotive world such as steel, rubber and aluminium and copper have been rising in the past six months which has increased the production cost of each vehicle manufactured in the country.
Steel prices have risen by 36 percent while the cost of natural rubber which had been on a steady decline for around three years has also jumped up by 25 percent.
Speaking on the possibility of a price hike, Rakesh Srivastava, Senior Vice-President (Sales and Marketing), Hyundai Motor India said, "With major raw material prices going north, there is a challenge to maintain current price points."
His thoughts were echoed by Pravin Shah, the President & Chief Executive (Automotive) of Mahindra & Mahindra. Shah said, "We have not taken a call as of now but the way steel and rubber prices are going up will compel us to also look at our prices so as to part compensate the increase in costs."