In this year so far, we have seen multiple car price hikes and if the rumours are to be believed, we will soon be subjected to another one. Rising input costs have been blamed time and again, and it’s not any different this time around. But Maruti Suzuki India emerges as a Good Samaritan in the midst of all this.
We all know that the price of raw materials in recent months have increased by 20-30 per cent, but MSI is not contemplating any price raise in its car portfolio for some time. Maruti, the country’s largest car maker, wants to maintain its pricing advantage by absorbing the rise in input costs, as rivals prepare to expand sales operations and launch new models.
Shinzo Nakanishi, managing director and chief executive officer of MSIL, said, “Right now, I am not thinking of any price increase. We will absorb the raw material price hike as much as possible. Definitely, there is pressure on margin. The competition is tough but because of it, the market is moving. There is always pressure on market share and we will defend it.”
The archrivals of Maruti, General Motors and Tata Motors, had earlier hinted that a rise in car prices was coming up. A senior official at General Motors had recently said that an upward revision in its car prices was being considered by the company.
Industry experts say that the prices of important raw materials such as auto grade steel, rubber and copper have risen sharply over the last eight-nine months, compared to the same period last year. Even the auto component suppliers are also under pressure, and domestic steel makers have already sounded out a hike in prices by three to five per cent in December.
Japanese carmaker Toyota is launching its hyper-publicised compact car Etios in January 2011. The car is expected to be positioned in the space where Maruti’s successful models like Swift and Ritz are sold.
Additionally, Ford and Volkswagen are also expanding their network coverage to reach out to the masses in huge numbers. Ford Figo and Volkswagen Polo, both the models are enjoying good sales despite having order backlog of three months.
Nakanishi added that Maruti would continue its plan of launching one model every year, in addition to offering upgrades and face-lifts. The Indian company is also in the process launching its new plant at Manesar to address the waiting period.
“This year, we should be doing about 1.23-1.25 million vehicles. Then, there will be an addition of 250,000 units’ capacity coming in from Manesar. Then, there will be a third plant, which will add a further 250,000 capacity.”
MSI is collectively investing more than Rs 3,600 crore for adding an annual capacity of half a million units, which would take its total capacity to 1.7 million units.
