Come Sept, Cars To Cost More

The continued weakening of the rupee against the dollar and a firming up of international steel prices are expected to push up the prices of small cars by mid-September. While most companies said they were still assessing the impact of the double whammy, sources in Hyundai Motor said that a Rs 10,000 increase in the price of its small car, the Santro, was imminent. "Manufacturers can hold on to the existing pricing only till mid-September," says an industry source. "Steel manufacturers abroad have already indicated their intention of raising prices." Speaking to Business Standard, Young-Chang Kim, Managing Director, Daewoo Motors India Limited said that cost pressures have indeed increased due to the depreciation of the Rupee. "We have, however, not worked out the extent of this cost pressure," Kim said. He said that DMIL would first look at cutting costs and absorbing as much of the cost pressure as possible. "We are not contemplating a price increase at the moment," Kim added. The automobile industry is already under cost pressure due to the depreciation of the rupee against the dollar. Since most manufacturers "" including Maruti Udyog Limited "" import a substantial portion of the steel used in their cars, they would find it very difficult to absorb the increase in price of imported steel, the industry source added. Maruti Udyog Limited is said to be in a better position since the yen has held against the dollar. However, even MUL would feel the pinch if imported steel becomes more expensive. Many of MUL's vendors though, are using steel produced indigenously. "It's very early days," says P Balendran, Associate Vice President, General Motors India Limited. "Let's see how the Rupee behaves n the next few days," he added. Opel Corsa, a flagship of GMIL, has a 52 per cent import content, while its other model "" Opel Astra "" has an import content of 70 per cent.