October 08, 2008

Auto majors hit by steel price hike – SIAM

It is reported that the increase in prices of steel has put an additional per unit burden of INR 750 to INR 100,000 on two wheelers to commercial vehicles though the auto companies may not pass on the impact to the customers. This is a broad assessment made by the automobile industry of the surge in steel prices and dos not include price increase that may be on account of component prices going up.

Mr Dilip Chenoy director general of Society of Indian Automobile Manufacturers said that "Taking into consideration only steel that manufacturers use and not including components, the industry would need a price hike between INR 750 for two wheelers at the lower end and up to INR 100,000 for commercial vehicles at the upper end. In a declining market, it is difficult for manufacturers to raise prices."

Mr Chenoy said that "Tough times ahead for three wheelers and commercial vehicle industry even as the passenger vehicles segment continues to grow." He added that there were a whole set of administrative and regulatory framework that needs to be streamlined for the growth of goods carriers. The non availability of finance and re possession of vehicles in case of default is a major area of concern.