After seeing some improvements in sales, premium passenger car maker Honda Cars India (HCIL) may soon increase prices of its products across all models. Other companies may follow, said analysts.

HCIL that sells hatchback and sedan cars such as Brio, Amaze and City, and multi-utility vehicle like Mobilio, may increase the prices due to recent fluctuations in dollar value against the rupee, sources from the company told BusinessLine . The company, however, remained non-committal on the issue of price increase.

“Some of the raw materials and critical components are sourced from other countries such as Japan and Thailand, and are valued in dollar terms. Therefore, we have to pass on some of the costs to the customers,” an official from the company said.

According to analysts, the step may be in the right direction, as many companies have not increased the prices over the last two years. And, since sales are improving now and many companies are launching newer models, they may increase prices for the existing models.

“Depreciating rupee is always a concern for many auto makers since they import bulk of the component especially in the higher end segment, also many original equipment manufacturers (OEMs) have not corrected their selling prices in the last two years looking at the depressed market condition,” said Abdul Majeed, Partner at PricewaterhouseCoopers.

He said OEMs will not be able to hold on to rising cost for a long and they eventually will have to be passed on to the customers. However, he added that the price increase would be a moderate one.

“As the economy is growing, the finance rates are also expected to reduce in the near future. With festival season also on the way, this would be good time for companies to increase prices,” said Puneet Gupta, Associate Director at IHS Automotive.

However, leading companies like Maruti Suzuki India and Hyundai Motor India may not increase prices anytime soon, and said they still have time to think over it.

“Right now, there is no intention for any price increase. We still have time to think and then will take a call,” said Rakesh Srivastava, Senior Vice President - Sales and Marketing, Hyundai Motor India.

comment COMMENT NOW