Indian carmakers may have to increase the price of their cars in the light of the weakening Indian rupee. The hike in prices could be up to Rs 10,000 for small cars and up to Rs 25,000 for sedans. The Indian automobile industry is already high strung owing to the hike in fuel prices and high interest rates on car loans. Thus, the price rise in the cost of cars is not something that the manufacturers would be very happy about.
The weakening of the Indian rupee affects the car manufacturers because many of the carmakers such as Maruti Suzuki, Honda and Toyota import various components for the assembly of their auto products. The prices of these components have gone up in terms of Indian rupee since the value of Indian currency has come done in comparison to other currencies.
The petrol powered car sales in India are already witnessing a record slowdown and increasing the car prices would worsen the situation. However, the diesel car sales have been consistent in spite of higher purchasing price than petrol cars. This is due to lower diesel prices in comparison to petrol prices and lower running costs.