Manufacturers Likely To Hike Prices On Rising Input Costs, Higher Excise Duty Chanchal Pal Chauhan NEW DELHI THE ride is set to get rougher for car buyers, with manufacturers gearing up to hike prices for the third time this year. According to car companies, the two hikes this year were too small to counter the rapid rise in raw material costs. Vehicle prices are expected to increase by up to Rs 5,000 for mid-segment cars and up to Rs 12,000 for the bigger saloons and SUVs. Apart from the recent spurt in input costs, the industry is trying to bolster its margins to maintain profitability and rationally absorb the recently-imposed specific excise duty of Rs 15,000-20,000 on all vehicles above 1,500 cc. Honda Siel Cars India has already increased prices of the City by Rs 15,000, the Civic by Rs 20,000 and the newly launched Accord sedan by Rs 30,000. Most carmakers like Maruti Suzuki, Tata Motors, Ford India and General Motors India are reeling under the double whammy of the excise hike and mounting input costs. Mahindra & Mahindra president (automotive sector) Pawan Goenka told ET: "Clearly, nobody has taken the quantum increase of input prices. The basic increases in raw material price are over 30%, while car prices have gone up by just 3-4%. It is not offsetting the entire impact and will be hitting our bottom line. We have no choice but to pass on the burden to customers.' General Motors corporate affairs vice-president P Balendran said: "We shall review the prices of our cars. We are evaluating the impact of the massive increase in input prices to take a firm decision.' The Maruti spokesperson said the company would decide on the issue after analysing the market scenario. Costlier Inputs INCREASING raw material cost is forcing the automobile industry to continuously review prices and go in for regular hikes. Car prices were increased in January by 3% this year followed by another mark-up in May-June, when prices went up by up to 4%. Now, carmakers say they are forced to go in for another increase as they are paying more for materials such as aluminium, nickel, copper, steel, plastic, glass and automotive tyres. The average cost of raw materials as a percentage of net turnover in a vehicle has gone up to over 74% from 69% two years ago. Toyota Kirloskar Motor India managing director Hiroshi Nakagawa said: "There has been constant pressure on our costs. The increase in prices of all major materials like plastics, alloys and steel is forcing carmakers to bring down costs and cut unnecessary expenditure. But there is a limit to these cost-reduction measures and value engineering. To absorb the increase in input costs we are looking for a price hike, which is yet to be decided.' The major increase in input costs are coming from steel which is up by Rs 13,000 per tonne, chrome-moly steel