Higher input costs pushing up bike prices

Higher input costs are pushing up motorcycle prices, with leading manufacturers like Hero Honda, Bajaj Auto and TVS Motor raising tags on select models by Rs 500 to Rs 1,000.

Industry sources and company officials told TOI that price hikes, which come amid a slowdown in the segment, have been effected from April 1, though efforts had been made to “absorb (pricing pressure ) as much as possible” .

Hero Honda, the biggest bike manufacturer, has increased prices by Rs 500 to Rs 1,000. The upward revision covers popular models like Splendor and Passion, dealer sources said.
Interestingly, the increase comes just a month after companies had slashed prices following the excise duty cut on two-wheelers .

Hero Honda had cut prices by Rs 1,000-2 ,400 after the budget , and company officials pointed out that all-time high prices of crucial inputs like steel, aluminium, nickel and rubber are adding to their woes. “The company has absorbed most of the pricing pressure of input materials and considering the reduction after the Budget, the customer still gets a benefit on purchase ,” they added.

Bajaj Auto, that saw sales falling as much as 20% in the domestic market in the last financial year, has gone for a hike of Rs 500-600 .

The hike covers the popular Pulsar model as well as the 135-cc? Discover. “The hike is only on certain models while some of the lower ones are out of it,” Gaurav Bagga of Bagga Motors said.

R Chandramouli, marketing head for TVS Motor, said the company has also raised prices of some of its models. “Overall, the hike is between Rs 200 and Rs 1,000,” Chandramouli said. While the 100-cc TVS Star City bike has seen price going up by Rs 1,000, the hike on the 160-cc Apache RTR is Rs 700. The TVS Scooty would be dearer by Rs 500 and the moped by Rs 200.

“We have had a price revision on all major models and this is due to appreciating cost of a majority of input materials . However, we are not fully offsetting the pressure,” Chandramouli said.

Sales of TVS had dropped 40% in the domestic market last fiscal. In the scenario of a high level of interest rate and not-so-easy retail financing, Chandramouli said, “We feel that sales would be better than last year and there would be marginal growth,” he said.

The latest hike in input prices came as a big blow for the bike industry that has been struggling to prop up sales growth.

Motyorcycles sales fell 12% last fiscal and companies have been spending a lot on promotional schemes to attract buyers.Profit margins are expected to be under pressure when the companies declare their results for 2007-08 soon, analysts said.

Source:economic times

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