Toyota was absorbing all the high costs till now and it is difficult to absorb the depreciation in coming days, so they will pass on a part of the cost to customers
The automotive industry is currently going through one of the toughest times as the rise in petrol and diesel prices has affected the sales and manufacturers are looking forward to the festival season for growth. The falling rupee is also a major concern for most of the manufacturers as it increases cost considerably.
The value of rupee is around 70-72 dollar, which will certainly affect the balance sheet. N Raja, Deputy Managing Director at Toyota Kirloskar Motor said that the company was absorbing all the high costs till now and it is difficult to absorb the depreciation in coming days, so the company will have to pass on a part of the cost to customers by increasing price.
Over the years, Toyota has increased localisation considerably but the company has to import some specific components. The falling rupee price will benefit manufacturers who export models from India but Toyota doesn’t export as many vehicles compared to its competitors because they have manufacturing plants in most of the countries.
The Etios series are exported from India to South Africa and Indonesia. When asked about whether they will increase export, Raja said that we cannot comment on our future export plans. He added that if India needs to become a truly global player then adoption of global standards is a must.
In 2017-18, Toyota exported 10 percent of its total volume and it is expected to increase in 2018-19 also. The price hike might not affect sales as volumes models for the company are priced in premium segments, which are not much affected by this minor price hike. We can expect an official announcement from Toyota soon.
Honda is also another manufacturer, which has recently said that they will have to increase price due to the falling rupee as they are planning to introduce two new models in India. The premium manufacturers also have concerns over this and Mercedes Benz increased the price by around 4 per cent from this month due to the rising inputs costs and falling rupee.