Honda may hike car prices if rupee remains weak against dollar

Honda Cars India may consider a price hike in September, its second within two months, on account of the poor show Indian rupee has put up against the US dollar. While the exact range of change in prices is yet to be decided, the Japanese car maker is keeping an eye on the performance of Indian currency for any dips.

Only last month, Honda Cars India Limited (HCIL) had increased prices by Rs 35,000 across models from the beginning of August to offset the burden of increase in input costs. The company is presently sitting on the idea of a price hike in hopes that the Indian rupee will bounce back from the continuous decline it has seen in the end of first quarter this fiscal.

"We are holding the price increase because one really doesn't know if this 72 will stay or come down to 69 level. We hope it comes down, if it stays then we will have to look at a price increase," Honda Cars' Senior Vice President and Director (Sales & Marketing) Rajesh Goel was quoted as saying by PTI.

The decision comes right ahead of the festive season in India when buyers show interest in consumer durables. The company would not like to bother customers during the festive season, Goel further said.

Goel said that localisation of the mass market models in the Honda portfolio remains high, the company is forced to bring about a price hike considering the unexpected steep decline in Indian rupee. "For our mass market models, localisation is huge, in Amaze it is 96 per cent. We also try and increase exports... Rs 72 (versus dollar) is something which was not predicated. You plan for something which is predicted," he added.

The Indian rupee nosedived to an all-time low of Rs 72.91 versus the US dollar in morning trade on Wednesday. The rupee limped back to 72.18 only after the Finance Ministry announced a weekend meeting led by Prime Minister Narendra Modi to check the freefall of the rupee.

In Indian markets, Honda sells popular compact sedans like City and Amaze, along with premium offering Accord Hybrid. Honda's portfolio also includes the hatchback Brio, as well as SUVs WR-V and BR-V. The company is planning to introduce the newer version of its sports utility vehicle CR-V in India some time soon. The company managed to sell over 17,000 units in August and registered a year-on-year cumulative growth of 9 per cent between April and August this year.