Auto majors hit by steel price hike

The increase in prices of steel has put an additional per unit burden of ₹750 to ₹ lakh on two-wheelers to commercial vehicles though the 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.

"Taking into consideration only steel that manufacturers use and not including components, the industry would need a price hike between ₹750 for two wheelers at the lower end and up to ₹1 lakh for commercial vehicles at the upper end. In a declining market, it is difficult for manufacturers to raise prices," Society of Indian Automobile Manufacturers (SIAM) director-general Dilip Chenoy told newsmen here today.

The industry body said rising raw material costs and availability of finance were major areas of concern. "Tough times ahead for three-wheelers and commercial vehicle industry even as the passenger vehicles segment continues to grow," Chenoy stated.

He said 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 are a major area of concern, he added.

The passenger car segment grew by 12.17 per cent in 2007-08 with 15,47,985 units being sold in the domestic market compared to 13,79,979 in the previous year. For the first time, exports of passenger vehicles crossed 2 lakh units in 2007-08 and ended the year with 2,17,054 units as against 1,98,452 units in 2006-07, according to the latest SIAM data released today.

Medium and heavy commercial vehicles segment declined by 1.66 per cent to touch 2,70,994 units in 2007-08 compared to 2,75,556 units in 2006-07. This is inspite of robust 34.72 per cent growth in passenger carriers sector segment at 28,655 units ( 28,693 units in 2006-07). However, goods carriers declined by 5.88 per cent to fall to 2,32,339 units (2,46,863 in 2006-07).

Motorcycle sales in the country during the year were down by 11.9 per cent at 57,68,341 units, against 65,47,195 units in 2006-07. While total two-wheeler sales in FY'08 also slipped 7.92 per cent at 72,48,600 units, compared to 78,72,334 units in the last year.

The sale of commercial vehicle sales during the 2007-08 fiscal increased by 4.07 per cent to 4,86,817 units from 4,67,765 units for the year, SIAM said.