Auto Makers in India Increasing Prices to counter higher costs, caused mainly by a sharp fall in the rupee currency’s value

September 20, 2013 Leave a comment

Updated September 19, 2013, 12:23 p.m. ET

Auto Makers in India Increasing Prices

SANTANU CHOUDHURY

NEW DELHI—Hyundai Motor Co., 005380.SE +0.39% Tata Motors Ltd.500570.BY +2.75% and General Motors Co. GM -0.93% are raising their vehicle prices in India to counter higher costs, caused mainly by a sharp fall in the rupee currency’s value. Prices of Hyundai’s cars such as the Eon and i20 subcompact hatchbacks will rise between 4,000 rupees ($65) and 20,000 rupees effective Oct. 1, India’s second-largest car maker by sales said. Only the Grand i10 subcompact hatchback, introduced in the first week of September, is excluded. GM is increasing prices of all its models from Oct. 1. The increase would range from 2,000 rupees to 10,000 rupees, said P. Balendran, vice president of GM’s India unit. A spokeswoman for Tata Motors said the company will be increasing prices of its passenger as well as commercial vehicles by between 1.0% and 1.5% in phases. Maruti Suzuki India Ltd., 532500.BY +5.57% the country’s largest car maker by sales, is evaluating “the impact of the increasing costs” and its options for any potential price increase, a spokesman said.

Hyundai, GM and Tata Motors followFord Motor Co., F +0.20% Toyota MotorCorp., 7203.TO +1.09% Audi AG,NSU.XE -2.87% BMW AGBMW.XE +1.74% and Daimler AG’sDAI.XE +2.06% Mercedes-Benz thatincreased prices recently. “Rupee depreciation and inflationary trends have impacted our input costs,” Hyundai Motor India Ltd.’s senior vice president for sales and marketing Rakesh Srivastava said. “We have been absorbing most of the costs but now we are compelled to consider the price increase.” The rupee had declined as much as 22% against the dollar between May 1 and Aug. 28—when it hit a record low of 68.80 to the dollar. It has since recovered some lost ground, but is still down about 13%. The weaker currency makes imported parts more expensive. Fuel retailers have also increased the price of diesel—which is used by trucks to transport vehicles across India. “The [price] hike will be on account of increase in input costs, increase in logistics cost due to fuel price hike and rupee depreciation,” said Mr. Balendran. GM sells the Chevrolet range of vehicles in India, including the Enjoy multipurpose vehicle and Spark subcompact hatchback.

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