Commodity, crude price rise increased manifold: Maruti Suzuki

Senior Executive Director (Sales and Marketing) of Automobile major company Maruti Suzuki India, Shashank Srivastava said that the rising materials and fuel prices are the next big challenges for the company.

Prices of commodities along with crude oil have increased manifold in past two years. This has been accelerated further due to Russia-Ukraine war and the company is not able to cover the rate of rise in production cost.

Shashank Srivastava said that the material prices which make up about 75 per cent of overall production cost have been high for the past two years. He also informed that the company is monitoring the situation closely and it will take an appropriate decision according to the situation on price hike.

He further said that any hike in material prices will impact cost structures and the company has increased its prices on five different occasions since January 2021.

Besides increasing product cost, Srivastava termed rising fuel prices as another alarming factor for the company, citing that the high cost impacts consumer sentiments negatively and an abnormal oil price hike reflects retail selling prices of petrol and in this situation a consumer goes for an alternative option like CNGs as running a CNG fuelled car costs only one-third of a vehicle running on petrol.

Srivastava pointed out that the rise in material and fuel prices will nudge the Reserve Bank to tighten monetary policy and it will push up financing cost for automobile purchases and retail

Moreover, he pointed out that pandemic unleashed pent-up demand will continue to support.

Nevertheless, Srivastava said that he is expecting the industry to grow with the growth in economy and the industry's volumes are projected to reach 33-35 lakh units in FY22.