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Toyota, GM To Hike Car Prices Over Falling Rupee
Both Toyota and General Motors are expected to announce a price hike soon, they will not be alone. Maruti Suzuki and Hyundai, the two leading carmakers in India might soon follow them and announce at least slight increase in prices. Carmakers who had to face a decline in car sales this April are no longer in a position to shield their customers from the falling rupee.
Toyota and GM import some vital parts from international markets and hence they are the first ones to highlight the need to increase prices due to the currency fluctuation. Toyota has been facing cost pressures to the falling Rupee as well as in the increasing value of the Yen. The Japanese carmaker has not decided upon the quantum of the price hike but it will be announced in June.
General Motors which was reportedly planning to announce a price hike that will be effective from June 1 has now decided to post pone it considering the amount of pressure consumers have come under following the price hike.
GM's decision makes sense as increasing prices would have alienated it from car buyers. Carmakers have already increased prices once this year in January citing increased production costs. Car prices went up again in March this year following increased taxes in the union budget. Now with the falling Rupee putting pressure on imports, carmakers must definitely prepare themselves for a difficult period.
While there was a sense of satisfaction and relief in the auto industry after the end of the fiscal year when sales increased the sector must now prepare itself for some tough times. Consumers are in no position to buy new cars with loans still being difficult to get and the high fuel prices has not helped the industry. Although increased petrol prices has helped increase demand for diesel cars, carmakers do not have enough production capacity to satiate this demand.
Further carmakers have a huge inventory of petrol cars that have remained unsold. Carmakers cannot afford to offer discounts to these petrol cars considering high costs. But they will also not be able to sell them. The only way out is to export them and Toyota has already started that by exporting the petrol variants of the Etios sedan.
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