The Hindu Business Line : Toyota’s Corolla Altis, Innova to cost more

Mumbai, Dec. 5 Toyota Kirloskar Motor (TKM) plans to hike the on-road prices of Corolla Altis and Innova by Rs 20,000 to Rs 30,000 next month. This translates into a nearly 3 per cent increase.

The Corolla retails at Rs 12 lakh for the manual version and closer to Rs 14 lakh for the automatic. The Innova has nearly a dozen price options ranging from Rs 8.5 lakh to Rs 12 lakh.

The Deputy Managing Director of TKM, Mr Sandeep Singh, told Business Line that the price increase was imperative as import costs had gone up following the rapid weakening of the rupee against the dollar. Both models have an appreciable import content of over 40 per cent.

“We had factored in costs and selling prices at a conversion of Rs 42 to a dollar. Today, the scenario has changed completely and we just cannot afford imports at Rs 50 (to a dollar),” he added.

A price hike is not the easiest of options during a slowdown but in the case of TKM, this is “absolutely unavoidable”.

Modifying output

Like its counterparts in the automobile industry, the company has had to stagger production levels to minimise stocks with dealerships and in its factories.

“There are huge costs involved while piling up inventories and our dealers are already feeling the heat. Even this month, we will have to cut back output sharply,” Mr Singh said.

The Innova and Corolla have been averaging monthly sales of a little over 2,500 units and 1,600 units apiece. Dealers say December will be “particularly difficult” for all automakers, which means TKM could see its sales fall by even 50 per cent. This is equally true for other carmakers, which explains why most of them are offering generous discounts in an attempt to liquidate stocks.

‘Relief needed’

The Government’s decision on Friday to reduce petrol and diesel prices by Rs 5 and Rs 2 a litre, respectively, is good news for the industry though Mr Singh said that the key to improving sentiment was providing more finance to buyers. “This is easily the worst period for a long, long time in the car industry and we need a slew of relief measures to tide over the crisis,” he said.

Top industry sources believe that Saturday could bring some good news from the Reserve Bank of India on easier borrowing. In addition, the auto industry is urging the Government to remove the recent excise duty slapped on cars with engine capacities exceeding 1,500cc.

There have also been repeated requests to reduce the levy on mid-size cars and sport-utility vehicles from 24 per cent to 12 per cent and bring this on par with small cars.

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