2018 has already seen two price hikes ranging from 2 per cent to five percent across carmakers in the Indian car market. With the rupee depreciating further, the input costs are increasing by the day, and if this continues, we might have to face another hike in car prices.
Almost all the carmakers in India rely on imports, be it engines, gearboxes or knocked down kits or entire cars. Even Maruti Suzuki imports the 1.0-litre BoosterJet engine that powers the Baleno RS. Also, India imports more than a tenth of automotive grade steel. Since the rupee has depreciated by almost 5 per cent in the last quarter, raw-material costs have already inflated.
Car makers have been absorbing the added expenses over the past quarter to get an idea if and when the volatility of the currency would settle, especially with international trade hitting troubled waters created by the US policies. If the down-slide of the rupee continues, carmakers, especially the ones like Volkswagen, Skoda, Toyota and Honda will have to implement another hike of prices.
With the festive season blooming, car makers would be hoping to postpone the price hike farther away towards the end of the year which is also the phase when carmakers usually announce price hikes for the new calendar year.