Tata Motors Ltd on Thursday said that it will raise the prices of cars and sport-utility vehicles next month to offset higher costs to make the products compliant with India’s new emission standards.
A price hike in April will be the second in as many months. Auto makers including Tata Motors increased prices by up to 2% in late February after the federal government raised factory-gate tax on manufactured goods as India started rolling back stimulus measures announced in late 2008.
Although auto makers don’t expect February’s price hike to severely hit demand, a second increase may hinder an otherwise robust growth trajectory, local car and SUV sales in the 11 months of the current fiscal year through March had grown 26% to 1.75 million units.
“The exact quantum of the price increase will be ascertained closer to the April 1 deadline” for meeting the emission rules, Rajiv Dube, president in charge of passenger car business at India’s biggest auto maker by sales, told reporters.
India will implement the new standards, called Bharat State-IV and comparable to Euro-IV, in 13 major cities including New Delhi and Mumbai on April 1. The remaining cities will move to BS-III from BS-II by October, but that may not raise costs at auto makers as most of the vehicles already meet BS-III standards.