Premium sedan manufacturer Honda Siel Cars India has hiked the prices of its popular models City and Civic. The price will be effective from May 1st week. The two sedans could be costlier between Rs 5000 to Rs 10,000.

Honda is only the second company after Maruti Suzuki India to increase prices on all its models from May. Maruti Suzuki is yet to announce the increase in price tag on each of its models. Honda has stated that they have resorted to hike in prices following increase in raw materials like steel and aluminum.

The constantly increasing prices have put pressure on car manufacturers since last three months to consider a hike in prices. The car companies chose caution in view of slow moving sales of new cars in the country and kept absorbing the rising costs.

Talking about the price hike, a senior official from Honda stated that “It has now reached a stage where a part of the rising input costs has to be passed on to customers. The quantum of increase for each model will be worked out in a week.”

Many other car manufacturers are expected to follow suit, as input costs has been increasing pressure on company margins. The car buyers of May will have to spend more than those who bought cars in April.

The prices of steel, aluminum and other materials have risen by 25–30 percent in the last three months. This has resulted in lower margins for car companies during the period. The car manufacturers hiked prices in January and then decreased prices following the reduction in excise duties on small cars in the 2008 budget in February. The highest reduction was witnessed in Maruti Suzuki, which announced price cuts on six of its models. The sedans had been exempted from the excise duty reduction.