As the dollar soars and the rupee spirals into a free fall, buying cars in India might get even more expensive. Reports on PTI suggest that Mercedes and Toyota, both of whom have manufacturing facilities in India are planning to hike prices based on the depreciating value of the rupee. As of now, at 72 rupees on the Dollar, concerns of risings cost have arisen among the auto manufacturers of India. Speaking to PTI Managing Director of Toyota Kirloskar India said that at present they are absorbing the cost but do not see it as a sustainable process and will eventually have to pass on a part of this cost to the customers by increasing prices. Toyota Kirloskar India functions under a joint venture between Japan’s Toyota Motors and the Kirloskar group and still depends on their Japanese partners for certain specific components although over the years it has substantially increased local content in its products.
Considering the wide spectrum of cars on sale under the TKM banner, from the entirely localised hatchback Etios Liva to imported premium SUV Land Cruiser, trade prices are likely to affect the course of the business. Meanwhile, At the upper end of the spectrum Mercedes-Benz’s Vice President, Sales & Marketing, Michael Jopp has also expressed concerns about the rising costs saying that while some hikes in prices have already come in, there has been further depreciation and holding prices is becoming a concern. If this were to continue, Jopp told the PTI that prices would inevitably hike further. However, thankfully Jopp has not specified a timeline for the next price hikes. This news follows Mercedes increasing prices by 4 per cent earlier this month, along with Honda Cars India who also raised prices based on the rupees’ depreciation.
As one of the largest hubs of automobile manufacturing in Asia, and the world, Indian automakers across the spectrum depending on a number of imported components that could lead to price hikes. Thus far, only three automakers have raised prices, but if the free fall of the rupee continues, one can fully expect prices to shoot up further.