Auto companies waste no time in raising prices

Manufacturers of two and three-wheelers and commercial vehicles have wasted no time in passing on the excise duty increase to the market.

The rise, which is already brought into effect, ranges from two per cent on two-wheelers to more than five per cent on some heavy duty trucks.

Auto makers, who have been reluctant to pass on the pressures of input price hikes in the past few months for fear of losing demand, have expressed inability in absorbing the excise duty hike even partially. Honda Motorcycle and Scooter India, the third-largest two-wheeler maker in India, has increased prices by Rs 826-996 on its scooter range, the Activa model.

Similarly, the motorcycle range will see an increase of Rs 888-3,400 with immediate effect. The company is yet to decide whether or not it should increase the price of the CBR 150, which it launched on Friday. The Chennai-based TVS Motors, the fouth-biggest two-wheeler company in India, too, said that the increase will be passed on to the consumer. The company's scooter range will see a rise of around Rs 700-900, while its motorcycle range could see an increase of Rs 780-1,580. Its three-wheelers have also witnessed a price rise.

Though India's largest two-wheeler maker, Hero MotoCorp and Pune-based Bajaj Auto, are yet to decide on the price rise, market watchers say the two companies will have to pass it on like the rest of the companies.

Growth in the two-wheeler market has beaten the growth of the auto industry at nearly 15 per cent in the April-February period selling 12.25 million units, according to data provided by the Society of Indian Automobile Manufacturers.

Since the quantum of hike is not steep in two-wheelers, market experts have stated that the impact on demand for scooters and bikes is not expected to be marginal.

Likewise, commercial vehicle market leader Tata Motors has too hiked price of its trucks and buses across segments. The Mumbai-based company has taken an average increase of two per cent on its commercial vehicle range.

A Tata Motors spokesperson said, "As we had said yesterday, Tata Motors has increased the prices of its commercial vehicles and passenger vehicles, with immediate effect, proportionate to the increase in the corresponding excise duty announced in the Union Budget".

For commercial vehicle, apart from the two percentage points increase in excise duty the Finance Minister also proposed to levy a uniform three per cent duty on chassis. As a result, with the duty going up to 12 per cent the added three per cent will mean 15 per cent duty on chassis. Ashok Leyland, VE Commercial Vehicles (VECV) and Mahindra & Mahindra have, thus, decided to increase prices of their CV models. VECV will raise vehicle prices by Rs 14,000-30,000 with immediate effect.