Maruti, Toyota, GM and Honda to head for another revision up to Rs 25,000
The falling rupee in the financial market has got the car manufacturers worried this time. Now it has become imperative for the car manufacturers like Maruti India, Toyota India, Honda and General motors to pass on their costs to the consumers. This time the consumers are likely to see a huge hike in the car prices in the range of Rs 25,000.
Now, why is this price increase coming at a time when the car market is witnessing snail paced sales. Obviously, the input costs are getting higher and higher by each passing day. Most of the companies including country’ s leading car manufacturer Maruti Suzuki India has their components imported from Japan. And the rupee value during the past week has reached the rock bottom during the last week at 52.73 a dollar.
This is a 17% depreciation in the last two months. The low rupee value impacts the import costs drastically and thereby reduces the profit margin. Therefore, it becomes inevitable for a car manufacturer to pass on the costs to the consumers. Maruti India invests a sum of Rs 8,000 crores on imports and makes far less on the vehicles it exports to other countries.
All in all, the net margin of MSI is said to suffer by 15% just because of the rupee depreciation. While this is the story of a domestic car manufacturer, a global auto giant like Audi has most of its cars imported as Completely Built Units (CBU). These are the car manufacturers who face the maximum wrath. As it is, they have to pay over 100% excise duties on imported cars. On top of that, the now higher exchange rates.
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