[akshladha]

The weak rupee is showing its ugly face. Honda is set to hike car prices across models by Rs 10,000 to Rs 1.5 lakh from January next year
to factor in increased production cost due to depreciation of the rupee and expensive raw materials.

Jnaneswar Sen, marketing vice-president for Honda Siel Cars, told TOI that the rupee depreciation has impacted the company’s production costs, forcing it to go for a price hike despite a slowdown in the market.

“Many of the parts are imported and the rupee’s depreciation has made them expensive . Thus, we will be revising car prices with effect from the first week of January,” Sen said.

The highest impact would be on the sports-utility vehicle CR-V, which is imported to India as a completely-built unit (CBU). “The price of the CR-V will go up by at least Rs 1.5 lakh,” Sen said.

While price of the luxury sedan Accord will go up by Rs 30,000-50 ,000, Civic will likely to be dearer by Rs 10,000-20 ,000. “Many of the components used in the cars are imported from Japan and the US,” Sen said.

Asked whether the City could also see a revision in price, he said the company “may consider” it. “For the moment we do not plan to increase the price of City as its new model has just been launched and we have to make deliveries at the announced price. We have received as many as 5,000 bookings so far,” he said.

The imported content in the Accord is about 75% and in Civic about 22%. The new City has about 26% imported parts. The current price of CR-V variants is between Rs 17.7-19 .9 lakh, the Accord between Rs 16.9-17 .7 lakh and the Civic between Rs 11-12 .8 lakh (all ex-showroom Delhi). The rupee has been weakening against the dollar for months and crossed Rs 50 last week. “The cost of imports from Japan alone has gone up by 30-35 % in the last around three months,” Sen said.

He said raw material prices also remained high despite softening in commodity prices. “While there has been talk of steel getting cheaper, the price of auto grade steel has still not come down,” he said.

Honda’s price hike comes at a time when the car industry in India is in the grip of a slowdown due to record-high interest rates and tight retail financing by banks. Sales of Honda in the April-October 2008 period fell 28% at 24,952 units against 34,578 units in the corresponding period last year.

Source : Economic Times, 24th November, 2008

[rangaraj]

With the economy going the way it is, the volume of these vehicles are going to drop significantly as it has already shown signs of in October. To top it off, if they think that with this announcement either people will flock to the showrooms to buy before December, they are sadly mistaken. Instead of increasing the %'age of localization and going the CKD route, many of them still are following the CBU route which puts them in the current predicament.

[vikram_d]

Originally Posted by akshladha

The imported content in the Accord is about 75% and in Civic about 22%. The new City has about 26% imported parts. The current price of CR-V variants is between Rs 17.7-19 .9 lakh, the Accord between Rs 16.9-17 .7 lakh and the Civic between Rs 11-12 .8 lakh (all ex-showroom Delhi). The rupee has been weakening against the dollar for months and crossed Rs 50 last week. “The cost of imports from Japan alone has gone up by 30-35 % in the last around three months,” Sen said.

I wonder why this content has not been localized?

[Vulken Auto]

The said conditions are true, How!I trade yen and its the fact. I see a decline in japanese goods in india for some time as we dont like high prices.

[mclaren1885]

Look, now we are going to be ripped off even more for what was to begin with overpriced cars.

[abhinav.gupta88]

You really cant help mclaren
The companies are facing problems due to recession and with rupee depriciating , the import definitely will be expensive.

[aseem]

This is pathetic. I dont see Honda or any manf reduce prices when Dollar went from being 47 to 39. Now when its gone to 50 its a hue and cry. Same for our petrol, the day it goes at 140 dollar a barral govt cries that its going bankrupt, and the day its back in 40s, everybody keeps mum and go laughing to the banks with our money.

[CBlazer]

This seems to be a way of tricking customers, much like the Civic Hybrid price cut was. First they overprice their vehicles. While everywhere in the world manufacturers are enticing people into buying cars by offering discounts, in India Honda tries to arm twist.

All because they are too confident of our weakness for the Honda brand. Somebody teach these guys a lesson.

Just wanted to add - the guy has the cheeks to say they may consider a price hike for the City. You already added that extra didn't you Mr. Japman! Don't tell me leaving out Alloy wheels and fog lamps weren't part of the plan.

[appuchan]

So far it was steel prices the usual reason for auto makers. Now that steel prices are at its lowest in many years, they became a little bit more innovative to increase price in the name of exchange rates, that too in an economic downturn! All the best to Honda.

[SkyWalker]

Oh Yeah. Hike those Civic & City prices some more in this climate and customers will take a hike
Looks more of a marketing ploy to sell in Dec.

[deky]

I think Honda is acting very smart hear, yet again just like they did with the Hybrid (most likely). Seems to me a case of of "buy it now or later you have to pay heavier prices" so there is a mad rush of people booking their cars. Later they announce "keeping the customer in mind we have decided not to increase the price of the car and bear the losses ourselves.

[karanraheja]

Originally Posted by appuchan

So far it was steel prices the usual reason for auto makers. Now that steel prices are at its lowest in many years, they became a little bit more innovative to increase price in the name of exchange rates, that too in an economic downturn! All the best to Honda.

I had read an article few days back that apparently the steel used by auto industry hasnt seen much price correction. IIRC it was an article in Business Line.

Originally Posted by SkyWalker

Oh Yeah. Hike those Civic & City prices some more in this climate and customers will take a hike

I dunno how they thinking of hiking prices of Civic atleast which is selling at its lowest levels . The more the hike in Civic , the Altis will become more VFM.

[Swifty2008]

Being a new model, Altis already has the advantage over the civic. If the Civic's price is hiked, it will only increase the sales of Altis.

[Sahil]

CRV pricing if hiked as mentioned to the tune of 1.5 lakhs will give the Outlander a clear edge. The road tax on CKDs are much lower too so thats another feather thats already in HMs cap.

[akshladha]

Originally Posted by vikram_d

I wonder why this content has not been localized?

Originally Posted by rangaraj

Instead of increasing the %'age of localization and going the CKD route, many of them still are following the CBU route which puts them in the current predicament.

Thats what these companies are trying. With new city loaded with localized parts, hence rightly priced, and GM and others approaching towards "made in India" tag, they are striving for less dependability. But then, people want better trim, better plastic finish for which u gotta depend on import qualities. Else like maruti, every other car would be blamed for poor build quality.