The Hindu Business Line : Maruti to hike vehicle prices by month-end

Maruti Udyog Ltd plans to increase vehicle prices by the month-end, with rising cost of key raw materials such as steel and aluminium putting pressure on margins.

Not disclosing the exact quantum of the planned price increase, Mr Jagdish Khattar, Managing Director of Maruti Udyog, said that the prices of almost all raw materials such as metal, rubber and plastic have increased this year. "There is a definite pressure on the prices and we are doing our best to contain prices through cost cutting measures," Mr Khattar said on the sidelines of a press conference announcing the launch of the company's upgraded WagonR model. "Maruti's vendors have sought an average 1.1 per cent increase in the price of raw materials," he added. Maruti is negotiating for a lower increase with its suppliers.

Mr Khattar said the price rise was also necessitated because of higher fuel prices, after gasoline and diesel prices were increased in June.

Vehicle sales growth had been "sluggish" this year after increases in vehicle-running costs and higher cost of financing. "In the first quarter, demand was good. Things are not as bullish now," he said, adding that Maruti was targeting "double-digit" growth this year.

Mr Khattar said the eight per cent excise duty cut on small cars, announced in this year's Budget, had more or less neutralised due to high road tax in some states as well as hardening interest rates.

WagonR revamped

Meanwhile, the company introduced a revamped WagonR, fitted with new head and tail lamps, grille, and interiors on Wednesday. The company has not changed the prices of the model, which costs between Rs 3.2 lakh and Rs 3.7 lakh. The carmaker also started selling a WagonR that runs on gasoline and liquefied petroleum gas (LPG). The LPG-petrol variant `Duo', launched in two models, will be available for Rs 3.4 lakh and Rs 3.6 lakh. "This is the introductory offer; we will review prices later," Mr Khattar said.

Maruti is presently importing the LPG kits from the US and Poland, and is in talks to set up a unit for the same with other firms.

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