Indian car manufacturers are contemplating an increase on car prices by 2 to 3 percent over the next few days. According to industry sources, the hike will see costs of premium cars rise by Rs 14000 to Rs 16000. The small cars may get costlier by Rs 4000 to Rs 6000.

Commenting on the impending price hike to a reporter from a leading English daily, Mr. Mayank Parekh, Marketing Head of Maruti Suzuki, said “Managing the inputs cost is getting tough. The company is thinking on a new price strategy, so that the consumer is not over-burdened by the hike. The price rise may become inevitable as the input costs keep rising and pressure increases on manufacturers.”

The prices of raw materials, used to develop cars, like steel, aluminium, nickel, plastic, and rubber have gone up. India’s leading car manufacturer Maruti Suzuki India (MSI) is trying to neutralize the impact of this phenomenon and the solution that is imminent is an increase in car prices that the consumer will have to bear.

The premium sedan manufacturer Honda is also thinking on the same lines. The Vice President of Sales and Marketing, Mr. Jnaneshwar Sen, said “A price rise looks imminent. But the exact details of price hike are yet to be worked out. The company is closely watching the market forces and international currency fluctuations. A decision on the price rise will be taken after considering these factors.” Honda currently imports car body parts and components from Japan and Thailand.

Mahindra & Mahindra is likely to increase prices to stabilize profit margins. The President (automotive sector) of M&M, Mr. Pawan Goenka, said “The pressure is increasing on car manufacturers due to a steep hike in commodity prices in the last three months. We have no option but to hike prices.”

There has been an increase of 25-30 percent in prices for different commodities, which are used to manufacture cars. Costs of foundries and castings (used in engines and transmissions) have also gone up. It has been one of the highest increases in costs of raw materials in the history of the automobile sector in India, said Mr. Goenka.

Other major player like Tata Motors and Hyundai are yet to voice their concern in this regard, but industry experts feel that they will also be forced to increase prices in the face of surging commodity (raw material) prices.