Sagging rupee may spur price hike by Toyota, Mercedes

Japanese automaker Toyota and German luxury carmaker Mercedes-Benz are considering price hike in India in the wake of the weakening rupee.

The value of rupee, hovering over 72 against the US dollar, has sparked concerns among auto companies.

"Currently, we are absorbing the high costs. However, if it is difficult to absorb in the coming days due to further depreciation, we will have to pass on a part of this cost to the customers by increasing the price," Toyota Kirloskar Motor (TKM) Deputy Managing Director N Raja told PTI.

TKM is a joint venture between the Japanese auto major and Kirloskar group.

Raja said the company is still dependent on imports for certain specific components although it has over the years substantially increased local content in its products.

TKM sells a range of products in the country, from locally-manufactured hatchback Etios Liva to imported premium SUV Land Cruiser. When asked if the company would also look at enhancing exports as one of the measures to balance an increase in import costs, Raja said: "We cannot specifically comment on our future export plans." He, however, noted that the company would continue to export the Etios series to countries such as South Africa and Indonesia.

"Having said that, Toyota is a global player with multi- production base in many countries, thus limiting our export space," he said. For India to be a true global player competing with the developed nations, harmonisation or adoption of global standards is a must, he added. "Not only will it give India an export advantage but will also give a tremendous boost to both vehicle OEMs as well as supply chain to export globally," Raja said. TKM exported around 10 per cent of the total production volume in 2017-18. Mercedes-Benz India Vice President, Sales & Marketing, Michael Jopp also believes that the sagging rupee is a concern for the company. "We have already implemented some price hikes based on development which happened over the last 2-3 months. The last few weeks have seen some more depreciation which again is a concern. At this point of time, we are observing but in case it continues further, price hikes are inevitable," he said.

Jopp however did not divulge on the time frame for price hike. The company has already increased prices up to 4 per cent from this month to offset adverse impacts of rising input costs and upward forex movement. Earlier this month, Honda Cars India said it may have to go for yet another price hike due to the falling rupee.

The Indian currency was caught in a free fall in the past few sessions and tagged among the worst performing currencies in Asia.