Leading Indian automaker Maruti Suzuki recently announced a price hike across its full range of models, effective immediately. The company’s representative stated that the price hike’s been undertaken “owing to increase in commodity and distribution costs and adverse foreign exchange rates.”
The Vitara Brezza will the the one hit hardest by the changes with an increase of ₹6,100 (ex-showroom, Delhi). The Vitara Brezza is the company’s best-selling car, and best in terms of sales in its category. Other models will be similarly hit but some like the Swift’s diesel variant will not see any immediate hike. As mentioned earlier, the price changes are effective immediately.
It’s worth mentioning that while almost all of the company’s line-up is heavily localised (up to 98%), some of the raw material still has to be imported and increased foreign exchange rates adversely effect the cost effectiveness of the product. The INR fell to an all time low of 70.32 against the US Dollar. While the rupee has been falling since quite a time, its now that the manufacturers decided to cut their losses and pass it to consumers.
Many other manufacturers like Tata Motors, Mahindra & Mahindra and Honda too announced price hikes citing similar reasons, such as rising input costs. Also, German behemoth Mercedes Benz announced that it will increase prices across all models by up to 4%, applicable from September 2018.
“The rising inflation due to geo-political dynamics, coupled with rising input costs and increasing forex rates have been exerting significant pressure on overall operations,” a Mercedes Benz spokesperson said. Such price hikes are very common, and from time to time, car makers pass on the increase in input costs to customers. Generally, such marginal price hikes don’t really affect demand as buyers often stomach the price increases as inevitable.