Maruti, Hyundai may hike car prices by Rs 1 lakh from January

MUMBAI: Maruti Suzuki and Hyundai Motor India plan to increase car prices by Rs 2,500 to Rs 1 lakh in January, as they seek to offset a dent on margin from higher raw material cost, steep discounts in the past few months and a weakened rupee that made imported parts more expensive.

Several other automakers have already announced price hikes and the rest are expected to do so soon, following in the footsteps of the market's top two.

For the automotive industry in India, price increases in January have become somewhat a norm, after they offer large discounts in the previous month to clear stocks from the year that is coming to an end and attract buyers who otherwise postpone purchases to the New Year. But Maruti, which makes one in every two cars sold in India, had mostly stayed off price hikes at the beginning of the year.

The company tries to absorb the commodity pressure, but multiple factors including higher discounts and the rupee's depreciation this time will compel it to increase prices, said RS Kalsi, Maruti's executive director of sales and marketing.

"We are planning to pass on from January maximum up to 2 per cent, and our pricing team is calculating how much each model's price will go up," said Kalsi. This will be Maruti's second price increase in six months.

Carmakers such as Toyota, Honda, Renault, Mahindra & Mahindra and Tata Motors have already announced price hikes of up to 3 per cent in January. Interestingly, discounts in the market at present are higher at 5-10 per cent, which at least some of the carmakers will have to keep offering in the New Year.

The discounts likely to continue in order to drive sales in a market that has become sluggish after demonetisation. While the discounts were higher in December, Kalsi said the average discount for Maruti during the quarter may not be dramatically different from the previous three months. If anything, there may only be marginal increase, he added. For Maruti, the January price hike could help lower the average discount, which had been trending lower before demonetisation. The average discount per vehicle in the September quarter had dropped to Rs 16,100 from a peak of Rs 22,000 in the last quarter of 2015.

Maruti Suzuki India Limited

Hyundai Motor India Ltd.