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

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.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: