Automakers in India to raise prices

India’s top carmakers, including Tata Motors Ltd., Maruti Suzuki India Ltd., Mahindra & Mahindra Ltd. (M&M) and Mercedez Benz, said they will increase the prices of their products because of the government’s proposal to increase excise duties by 2% on large cars, from 22% to 24%. Finance Minister Pranab Mukherjee made the announcement during his 2012-13 Union Budget speech in Parliament. M&M said it will increase the prices of its entire range of vehicles and will pass on to the consumer the entire burden of the excise duty. “The input costs have also gone up in recent times. Considering this, we will raise the prices of our vehicles by 2-3%, translating into an increase of Rs6,000 to Rs30,000 (US$116.66 to US$582.64)),” said Pawan Goenka, president of M&M’s Automotive & Farm Equipment Sectors. Mercedes Benz India Director (Corporate Affairs and HR) Suhas Kadlaskar said, “We are going to pass on the additional burden to customers. We have not decided the exact amount yet, but on an average it will vary between Rs200,000-300,000 (US$3,888.18 to US$5,832.27).” Carmakers Maruti Suzuki, Tata Motors, Ford India and others said that the increases in the prices of their vehicles will be in proportion to the rise in the excise duty. “We are going to raise the prices of all our products and will pass on the entire additional excise duty. Currently we are working on the exact amount of the hike,” said Mayank Pareek, managing executive officer (marketing and sales) of Maruti Suzuki. The government also increased the basic customs duty from 60% to 75% on imports of completely built units (CBUs) that have freight on board (FOB) value of more than US$40,000 and an engine capacity of more than 3,000 cc and 2,500 cc for gasoline and diesel vehicles. (March 16, 2012)