Auto companies asked to lower prices

The government of India has told car manufacturers to cut model prices which have been on the rise lately. All major car companies in the country have hiked the prices of their high-selling models in recent weeks. These include Maruti Suzuki’s Swift, DZire and A-Star, Hyundai’s Santro, i10 and Accent, Toyota’s Corolla and Innova and Chevrolet’s Spark and Optra. The Finance Ministry has reportedly written to the Ministry of Heavy Industry as well as the Society of Indian Automobile Manufacturers (SIAM) asking them to justify the increase in prices despite economic stimulus and excise duty cuts. The media has also learned that auto companies have been warned of losing all prospects of financial help in the future if they fail to cut prices.

In his reply to the Finance Ministry, SIAM Director General Dilip Chenoy said that while high input costs were absorbed when demand was slow, some of these high costs are being passed on to consumers now that demand has stabilized. The government, however, considers this logic unsound because the prices of a number of other vehicles, which would also have been impacted by high input costs, are still the same. The prices of two-wheelers, three-wheelers and commercial vehicles have not increased.