The consistent rise in raw material prices such as steel hasreturn a double whammy for auto makers who are staring at poor operating margins.
Sports utility vehicle specialist Mahindra & Mahindra (M&M) pass 1/2 of the raw material price only increase to its customers,whereas riveting a major chunk for concern for symptom retail demand.
Passenger vehicle demand has remained disappointingly low over the past four months forcing automotive manufacturers to extend discounts to liquidate stocks. The consistent rise in raw material costs like steel has return as a double whammy for automobile firms who are looking at poor operational margins.
Pawan Goenka, decision maker, M&M said, “There has been a rise of 250 basis points in raw material costs and more than that for tractors. we've got passed on 1/2 that to customers only whereas riveting a number of it.” (100 rate = one share point)
Korean automotive maker Hyundai too has been reluctant to depart this world the rise to its consumers. the corporate has not created any across the board hike in its product vary. Maruti Suzuki didn't raise costs once more when August despite depreciation of the Indian currency symptom its bottomline.
In a telephone call, Ajay Seth, CFO, Maruti Suzuki, said, “There isn't any thought at the instant on increment. we've got to look at however the market goes. At the instant, the market is flat. So, we'll ought to contemplate all those factors before any call on this needs to be taken.”
Despite a flurry of gala days, PV sales rose only one.55 % year-on-year in October to two.84 large integer units, in line with information shared by the Society of Indian Automobile makers. throughout Diwali, dealers reportedly struggled to convert shopper walk-ins and enquiries to confirmed bookings and orders.
A combination of a spread of things like rise in insurance premiums, fuel value hikes, alteration of disposition norms for machine loans and negative purchaser sentiment have hurt automotive demand in recent months.
Manufacturers hope that pre-buying in 2019 can supply them a chance to hike costs. consumers are delivery forward purchases next year to beat the worth hike due in 2020 for Asian country Stage VI upgradation. costs of cars ar expected to travel up by the maximum amount as Rs one large integer.
