Financial Daily from THE HINDU group of publications
Wednesday, Feb 09, 2005

Port Info

Group Sites

Industry & Economy - Automobiles

Auto majors see rise in Q3 input costs

Our Bureau

New Delhi , Feb. 8

AUTOMOBILE majors faced the brunt of rising raw material costs in the third quarter of the current fiscal as prices of key inputs such as steel, aluminium and plastic shot up.

The third quarter results of 13 major vehicles manufacturers showed a majority of them reporting an increase in raw materials cost (as a percentage of net sales)compared to the third quarter of the previous fiscal.

Tata Motors, Mahindra & Mahindra, Bajaj Auto and Hero Honda figure in the list.

For instance, Bajaj Auto's raw material cost, as a percentage of net sales, rose by 5.6 per cent, while Hero Honda reported a 3.14 per cent jump, Tata Motors 6.5 per cent and Mahindra & Mahindra 2.3 per cent.

"The sharp rise in steel prices has impacted the operating margins of almost all automobile manufacturers. Companies are trying to absorb the additional cost burden through improved productivity and cost cutting initiatives. However, in some cases the increase in price of inputs such as steel may be faster than the required volume growth to increase the level of productivity," points out an analyst at a leading securities firm.

Prompted by the jump in cost of inputs, some of the companies are contemplating a hike in prices.

Eicher Motors and Tata Motors are among those that recently hiked prices of their commercial vehicles.

According to analysts, the pressure on margins for most automobile companies could continue in the coming quarter, with the implementation of new emission norms and an expected firming up of iron ore prices.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
IFC plans weather insurance products for Indian markets

Isolated showers in Kerala midlands
Auto majors see rise in Q3 input costs
China has its way at G7 meet
No question of cutting down subsidies for poor: Chidambaram
US graduates India out of aid budget
Applications invited for awards in waste management
Russian trade info centre opened
FICCI, Norwegian chamber sign MoU to boost ties
Sharjah free zone demo
NCB cautions pharma cos on distributors with dubious connections
7 doctors get Wockhardt awards
Drive to tackle jaundice in Kerala
Legislation on special economic zones — Commerce Ministry optimistic GoM will resolve differences
Indo-US summit to discuss infrastructure issues
AP Cabinet okays $300-m World Bank project
KFDC staff plea against closure
Kerala Minister's assurance on endosulfan plant
BPCL to expand Trombay refinery capacity to 12 m.t.
Tapti, Panna-Mukta gas fields — Operators asked to maintain supplies to existing consumers
AES Corp plans to bid for new power projects
Power dreams of duty cuts in Budget 2005
BHEL develops power saving tool
VAT panel seeks removal of CST waiver on inter-State purchases
AP Minister's fiat to tax officials on VAT regime
Kerala: Levy on liquor transport
Textile stocks on radar in post-quota regime
Textiles: New challenges in quota-free era
Minister to review textile sector financials
No plan to revise H1 B visa quotas, says US Ambassador
Caution on Kerala groundwater levels
Tuticorin Fisheries institute plans certificate courses
Deccan Gold identifies new prospects in AP, Karnataka
Nobel laureate's lecture in city
Presentation on `Vinci technology'
Management seminar
Art prints expo in Hyderabad
Export units keen on tax sops
Contributions to The Hindu Relief Fund
`Tea tourism' project of Bengal approved

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line