As if the depreciation of Rupee was not heavy enough on the Indian citizens that the prices relating to the automobile industry and consumer segments that include home appliances and other electronic items are likely to go up as well. Some of the companies have reported that the prices are likely to shoot up if the rupee keeps on maintaining its deprecated value and some other companies report that the whole situation is being closely analyzed.
The car makers present in India have no dearth of local sourcing but there are some indispensable inputs that need to be imported for a number of intents and purposes for e.g. sophistication in technology. All these imports were already costly and now have become a whole lot costlier. The automobile sector did not completely recover from the hike in the excise duty during the budget announcement that happened merely two months ago and now with this expected rise in prices the sentiments would hurt all the more. The hike in prices is sure to have a detrimental effect on the growth targets as well.
According to the deputy Managing Director of Toyota Kirloskar Motors, Mr. Shekar Viswanathan the profit for the automotive company goes down by Rs 90 Crore if rupee value depreciates by one mark. The Vice President of General Motors India, Mr. P. Balendran mentioned that the devaluation of Rupee has impacted the finances of the company in a very bad way as up to 30 percent of the total content required by the local car manufacturers is imported.
The Chief Financial Officer of Maruti Suzuki India, Mr. Ajay Seth also revealed his uneasiness and stated that both direct and indirect imports account to around 20 percent of the company’s net sales and if the Rupee is going to get deprecated like this, the company would face serious issues. The Director of Marketing and Sales of Hyundai India, Mr. Arvind Saxena mentioned that with the fall in the value of Rupee the costs of materials have gone up which is a very worrying matter, but the company can easily absorb this hike in car prices as it is exporting cars in huge volumes.