ArcelorMittal wants to raise steel prices for carmakers in Europe

The world's biggest steel company, ArcelorMittal wants to raise automotive steel prices for car makers, to the tune of 60 percent. This is due to an increase in the cost of raw materials.

‘Our cost increases correspond to this level. We are looking at progressive steps to adapt the price while avoiding a large and painful increase next year,’ said Jean-Luc Maurange, vice president, ArcelorMittal. ‘The imbalance between supply and demand is long-term. That is why the market price of steel has doubled in a year, rising from 600 to 1,200 euros a ton,’ he added.

The group supplies about 23 percent of the steel used by German car makers, and its market share across Europe reaches 50 percent. ArcelorMittal has announced several price increases since January, in particular for flat steel products, amid strong demand and sharply higher commodity prices.

Tyre manufacturers hike prices, more price hikes may be in store for consumers

Even as inputs costs continue to rise, all tyre manufacturers are increasing tyre prices to deal with the issue. Rubber prices, which constitute about 60 percent of the input costs for tyres, rose by 31 percent this year.

Ceat Ltd. will raise prices of non-truck tyres (this includes farm vehicles, car and two-wheeler tyres) by 2-5 percent on the 10th of June. This hike comes just days after the company raised truck tyre prices by 2 percent. MRF and Apollo Tyres have also raised prices recently, while JK Tyre plans to hike prices later this month.

Tyre manufacturers are watching the market and trying to assess how much of a price hike it can take. If the situation warrants – in case rubber prices don’t come down – consumers may have to bear the brunt of yet another hike in the price of tyres later this month, or in July.

Tata Motors hikes car prices by up to 3%

Tata Sumo Grande prices have been hiked by about three percent

Tata Motors has announced a hike in the prices of its passenger vehicles by up to three percent, due to rise in input costs. The Indigo and Indigo Marina cars would be more expensive by 1-2 percent, while Sumo and Safari prices will go up by 2-3 percent.

Maruti, Hyundai and M&M have already announced price hikes earlier, with each carmaker saying that prices hikes have been made necessary because of steadily increasing input costs.

Petrol may be deregulated, prices may go up to Rs 65 per litre

The three oil PSUs and car/bike owners in India don't have much to smile about anymore

In the face of sky high crude prices, which touched an all-time high of US$135 per barrel last week, and given the fact the oil PSUs are incurring huge losses, the Indian government may soon consider decontrolling petrol prices.

State-owned oil PSUs in India – Indian Oil, Bharat Petroleum and Hindustan Petroleum – expect a revenue loss of Rs 200,000 crore in this fiscal, on the sale of petrol, diesel, domestic LPG and kerosene. To save these companies from disaster, petrol prices may have to be deregulated, which may mean that consumers could soon be paying up to Rs 65 or more for a litre of petrol.

Deregulating petrol prices would mean that prices in the country would be similar, or somewhere close to international petrol prices, which, in most cases, is much higher than what we currently pay in India. However, to save the transport industry, diesel will continue to be sold at a subsidized price, though there may still be a price hike on the fuel of Rs 2 – 3 per litre.

Currently, petrol in India is being sold at a massive loss of Rs 16.34 per litre, and diesel at a loss of Rs 23.49 per litre. Hence, deregulating petrol prices, which would cut revenue losses by only Rs 20,000 crore, can only be part of the solution.

In fact, the three oil PSUs are already facing a huge liquidity crunch, and having to resort to borrowing Rs 3,500 crore a month to meet expenses. Indeed, the future for oil PSUs, and for car/motorcycle owners looks bleak. Perhaps the time for electric vehicles has come already?

Petroleum Ministry wants Rs 10/ltr hike in petrol prices

Soon, you may be paying up to Rs 60 per litre of petrol!

The Petroleum Ministry is seeking price hikes of Rs 10 per litre for petrol, and Rs 5 per litre for diesel, along with cuts in customs and excise duties to offset the impact of surge in crude prices, which recently went up to US$135 per barrel.

‘The situation is getting to be alarming. We need to stem the rot in the beginning,’ said M S Srinivasan, Petroleum Secretary, after a meeting with the heads of the three oil PSUs in the country. He added that fuel prices being hiked is now inevitable and a final decision on this could be expected in the next 2 – 3 days.

Oil PSUs under great duress, Govt may hike fuel prices

Headed by Prime Minister Manmohan Singh, the Cabinet may meet today to consider, among other measures, increasing petrol and diesel prices. This is to help State run oil companies that have been reeling under unprecedented crude price highs.

With Indian Oil, Hindustan Petroleum and Bharat Petroleum projected to lose up to Rs 200,000 crore in revenues – on the sale of petrol, diesel, domestic LPG and kerosene below import cost – a price hike in the range of Rs two to five per litre might be inevitable. ‘We are discussing all possible measures to help and protect our public sector oil companies. Some remedial measures need to be taken,’ says Petroleum Minister Murli Deora.

IOC, HP and BP are currently losing Rs 450 crore in revenues on fuel sales every day. Loss per litre of fuel sold is Rs 16.34 for petrol, Rs 23.49 for diesel, Rs 305.90 per cylinder of LPG, and Rs 28.72 for Kerosene. With international crude prices topping US$135 a barrel, the heads of Indian oil PSUs will be hard pressed to find a solution to their financial troubles.

The three oil PSUs in India are facing a big time liquidity crunch, and they are having to resort to borrowing Rs 3,500 crore a month to meet expenses. Total borrowings of the three firms have reached Rs 65,000 crore, which seems to be a major cause of concern.

The Indian government’s ban on allowing oil PSUs to raise fuel prices will mean that the three companies will end the current fiscal with losses of up to Rs 200,000 crore. This is a huge increase on last year’s losses of Rs 77,304 crore.

While the situation does seem quite bad, it does not warrant panic. There were reports in the media that BPCL has started rationing of fuel and has fixed quotas for each of its petrol pumps. At this time, it's not clear if these reports are true - going by some accounts, this may not be the case, or may only be a very short term measure.

But yes, what is certain is even more expensive fuel in the short- to medium-term, and a forced shift to electric vehicles all over the world, including India, over the next 10 years.

External links:
Auto stocks face the heat as fuel prices surge...

Hyundais to be more expensive by up to 2pc from June

Expect the i10 and other Hyundai cars in India to be more expensive by Rs 4,000 to Rs 15,000 from June onwards

After Mahindra and Maruti, it’s now Hyundai that’s announced a price hike on its cars. The company said it would raise prices on its cars by up to two percent in the first week of June. As is the case with other auto manufacturers, input costs are being cited as the reason for this increase in prices.

‘There has been an increase in the input costs and we have been absorbing it for a while. The situation now is such that we have to pass some parts of it to the consumers,’ says Arvind Saxena, senior vice-president - marketing & sales, Hyundai Motor India Ltd (HMIL). He added that price hike would be up to two percent, and will come into effect from the first week of June.

However, if you’ve been waiting to buy your Santro or Getz, you needn’t necessarily rush to your nearest Hyundai dealership right away. Because of the stiff competition – especially in the small hatchback segment – expect fairly significant dealer discounts, freebies and add-ons to offset price hikes announced by manufacturers.

Maruti increases car prices by Rs 1,000 to 18,000 across various models

The new Maruti Dzire is now Rs 18,000 more expensive

Due to rising input costs, carmakers have been making noises about an impending price hike, and indeed, after M&M increased prices about 10 days ago, it’s now Maruti Suzuki that’s gone ahead and hiked prices. The company has raised prices by Rs 1,000 to Rs 18,000 across various models in its lineup.

The Dzire, which was launched at an ‘introductory’ price of Rs 4.49 lakh, is up by Rs 18,000. The SX4, Gypsy and petrol Swift are up by Rs 9,000 while the diesel Swift’s price is up by Rs 15,000. Zen Estilo prices are up by Rs 1,000 while the age-old Maruti 800 is now Rs 1,500 dearer.

Omni and Wagon R prices have been hiked by Rs 2,000 and the Versa, which hasn’t been doing very well anyway, is up by Rs 8,000. The Grand Vitara SUV is the only Maruti whose price has not been increased, which is just as well because it hasn’t been able to take on its main competitor, the Honda CR-V, in any case.

Mahindra announces price revision

Mahindra & Mahindra Ltd. (M&M) has announced a 1.5%-2.5% (Rs 3,450 - 21,000) upward revision in prices of its vehicles. The company says this has been necessitated by a significant increase in input costs. The increase in M&M’s vehicle prices will be effective from the 19th of May, 2008.

Cars to cost more from May 2008

If you’re planning to buy a car, you should better hurry up, because from May 2008, cars are going to be more expensive. Most car manufacturers are going to hike prices and with higher interest rates, even car loans are going to cost more. The price hike in most cases may not be more than 1% – 2% but buyers are still likely to feel the pinch.

With rising input prices – aluminium, plastic, rubber and especially steel are getting more expensive – carmakers have been left with no option but to increase prices. And higher interest rates will largely be due to the recent hike in cash reserve ratio (CRR), which is forcing banks to raise interest rates. To take just one example, ICICI Bank’s car loan interest rate used to be around 13.75% to 14.25%. It will now be hiked to at least 14.5% and maybe a bit more.