Consumers defy rising car prices

Hyderabad/ Mumbai , April 1: In spite of the price hikes and rising interest rates, Indian automakers have recorded another strong month of growth, mostly double digits.
Consumers continue to defy the rising prices — in this case the post budget hikes as the finance minister had raised excise duty on cars.

Apart from the strong growth, FY10 also saw another landmark — the first time an Indian auto firm manufactured over one million cars in a year. For the companies however, all may not be well as input prices are rising and may offset even the growth in sales.
March sales were strong despite price hikes after the budget. According to experts, consumers tried to beat another round of price hike due to new emission norms effective from April. “The increase in sales for the month of March can also be attributed to the hike in prices that have come into effect from April 1, 2010, because of increase in input costs, the implementation of BS-IV and the increase in local road tax and local sales tax,” Toyota Kirloskar Motors deputy managing director (marketing), Mr Sandeep Singh, said.
The biggest increase in percentage terms has been for Ford India, which saw volumes treble on back of strong demand for Figo, its small car. The small car segment has seen the maximum action in India, with four launches since the beginning of 2010.
However, there are some worries for the firms as well. Bank of America-Merrill Lynch in its report on the auto sector says that a sharper than expected increase in input and emission related costs would hit margins. Prices of raw materials such as steel are also expected to go up. Given the strong competition in the sector now, automakers will also have to absorb some of these rising costs.

Age Correspondent