There is still cost pressure. We have taken some price increase on utility vehicles as well as on the cars (in) earlier part of this year. When you are in a declining industry, it is prudent to trim down the cost instead of price hikes, Krishnan said at the launch of Indica Vista here on Thursday.
Margins may improve in two wayseither you increase the price or you decrease the cost. What we are trying to do is to decrease the cost, he said.
For Apr-Jun, the companys operating margin was 7.70%.
Krishnan said the passenger car market in India during 2008-09 (Apr-Mar) was hit due to rising inflation, and increase in interest rates.
He said more rate hikes by the Reserve Bank of India is likely to dampen vehicle demand further. In July, passenger vehicle sales in the country fell by 3%, he said. However, Krishnan was hopeful that vehicle demand would improve in second half of the year starting from Oct because of the festive season.
But we will not be seeing the type of growth which we had (seen) in earlier years of 15-20% coming during this year, he said.