Car sales vroom along

There’s some respite for car makers at last. Steel companies have recently cut prices by Rs 4,000 per tonne. Pawan Goenka, CEO, M&M Automotive, says: “It’s pretty hard, since we are getting squeezed from both sides. Prices of raw materials are increasing. But we are wary of passing these on entirely to consumers.”

Rising prices and interest rates have raised the total cost of ownership by around 10 per cent over the last one year. Luckily for Goenka, demand has been fairly elastic over the past few months despite price increases.

M&M recently said it would increase prices between 1.5 and 2.5 per cent and the country’s largest car maker, Maruti Suzuki, has announced that a substantial increase in prices will take place shortly.

It had raised prices in January that were negated by the duty cuts on small cars announced in the Union Budget for 2008-09.

This April, passenger vehicle sales have risen 21.2 per cent year-on-year, but it must be borne in mind that April 2007 was a particularly poor month.

—Kushan Mitra