Tata Motors to hike passenger vehicle prices

PTI New Delhi | Updated on March 18, 2011

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From April 1, Tata Motors passenger vehicles will cost more by Rs 7,000 to Rs 36,000. The Nano, which is just about showing signs of revival, will remain untouched.

“Despite continuous cost-control initiatives, the company is being forced to take these increases on account of steep rise in input costs,” Tata Motors said here on Friday.

The Indica prices will go up by Rs 7,000-9,000 while the Vista and the Indigo CS will become dearer by Rs 8,000-Rs 11,000. The Manza's price tag will get steeper by Rs 10,000-15,000.

Utility vehicles

As for utility vehicles, the Sumo will see a price increase of Rs 13,000-15,000 while the Grande will be dearer by Rs 16,000-19,000. As for the Safari, its price will be hiked by Rs 18,000-29,000, the Aria by Rs 30,000-Rs 36,000, and the Venture by Rs 9,000-12,000.

The news has not come entirely as a surprise given that companies have been vocal about the pressures of raw material costs. It is, therefore, only a matter of time before other manufacturers follow suit shortly. “Typically, within the industry, it takes one company to take the lead while the others follow in due course,” sources said.

Diesel strength

According to them, Tata Motors will not see too much of an impact on its car sales considering that its portfolio is primarily diesel, which is the preferred fuel in the market. Petrol, on the other hand, has been seeing a steady increase in price with the result that its price differential with diesel has doubled to nearly Rs 20 a litre in less than a year. This could also prompt Tata Motors to fast-track the launch of the Nano diesel.

In the automobile industry, the general consensus is that the ‘good growth' party is coming to a close with projections for 2011-12 a lot more modest at 12-15 per cent. Inflation is already hurting household budgets and this will only prompt people to defer buying cars.

There is also the added fear of a further increase in fuel prices. Petrol, for instance, has become dearer by nearly Rs 10 a litre in the last eight months though its consumption continues to be brisk at nearly 15 per cent. However, there is only a limit to which the customers' endurance can be tested and a further hike will only be a dampener.

Published on March 18, 2011

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