Rupee Slides; Car Buyers To Face The Heat
But if such a situation persists, a price rise would be the most prefered option for them to counter the adverse forex impact. This passes the additional costs on to the consumers of their products. Automakers such as Toyota, Ford Motors, Mercedes Benz and Audi are keen in revising the prices of their vehicles at the end of this month. Honda has already raised the prices of all its cars. Others are closely waiting for a right time.
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|Automakers mid-term focus would be additionally on scaling up exports from India|
On the industry front, depreciating rupee would lead to lower growth prospects. This would in turn seriously hurt investments in the automobile sector by cutting capital inflows. Companies would skip their manufacturing expansion plans and would also affect the localisation process of auto parts.
The impact of depreciating rupee on consumers is not limited to dearer durable goods (not just cars). Car buyers would face the nightmare of high EMI rates as cuts in interest rates by the RBI (Reserve Bank of India) is unlikely to occur. Higher fuel prices is the next demon. Already the gap in the prices of Petrol and Diesel is diminishing. With sliding rupee value, frequent hike in their prices would be recurring. The worst part is that we would be paying more for fuel even though global prices of crude oil have hit a year-low.
A really tough time for the Indian auto industry. Not just the companies, consumers do suffer fairly.
Image Courtesy: www.madrasi.info, www.myindiaguide.com