Financial Daily from THE HINDU group of publications
Wednesday, Jan 05, 2005
Financial Daily from THE HINDU group of publications Wednesday, Jan 05, 2005 |
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Industry & Economy
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Cars Rise in raw material prices to make cars dearer Neha Kaushik
New Delhi , Jan. 4 CAR buyers may have to shell out a little extra in the new year. The recent round of price increases in key raw materials such as steel and aluminium may force passenger car manufacturers to increase prices by a quantum higher than envisaged earlier. Analysts said that most of the price increases on vehicles are expected to be in the Rs 4,000-6,000 region. According to an official with a leading car company, margins have been under pressure from rising raw material costs; in addition, companies are likely to pass on the costs of shifting to new emission norms that are to come into effect later this year. The impending price increases are set to come in to effect on new Euro III compliant models, which would be made available around end-January to February this year, sources said. "Though the new emission norms will come into effect in April this year, most of the companies will roll out the new models and take the price hike on the new models in the January-February period itself. In fact, many firms may even position the new emission technology in April as Euro III technology at Euro II prices," the official said. Maruti Udyog recently sent a communication to its dealers indicating that it may raise prices by Rs 5,000-20,000 in January owing to increase in cost of raw material. Other carmakers such as Hyundai, Ford, and GM had announced in December their intention to increase prices of their vehicles in January. An automobile dealer said while the bulk of the price increase would be brought in due to upgradation to new emission and safety norms, manufacturers are likely to absorb much of the increases in steel and other raw material prices.
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