COMMODITIES Archives

Maruti Suzuki, India's largest car maker, said it will increase car prices next month due to increased costs. "Over the past year, the cost of company's vehicles has been impacted adversely due to increase in commodity prices and foreign exchange rates, etc. "Hence, it has become imperative for the Company to pass on some impact of the above additional cost to customers through a price increase across various models in January 2019. This price increase shall vary for different models," it said in a statement. The auto maker did not give the range of increase, nor did it say whether all models will be impacted -- as seems likely -- or if some models may be excluded from the price increase. COMMODITY CYCLE The timing of the price increase is curious, as steel prices have in fact started coming down in recent weeks after rising for most of 2018. Steel was priced at around 4,200 yuan per ton at the beginning of the year, and rose to around 4,770 by October. However, since then, most of the global commodities have seen a price correction, and steel is currently at 3,798 yuan per ton. Similarly, aluminium prices have been on the rise since hitting rock bottom towards the end of 2015 at around $1,450 per ton. They rose to a record $2,550 in early 2018, but have also been on the decline since then. Currently, aluminium prices are at around $1,973 per ton. Part of the reason for the steep decline in commodity prices in recent weeks has been been the threat of trade wars between the US and China. However, over the last few days, there have been indications that the two countries may be able to come to an understanding on tariffs and other thorny issues such as forced technology transfer from US companies to Chinese companies. Despite this, commodity prices are yet to show a definite break-out in their prices and reverse the declines. Despite the higher car prices, Maruti Suzuki will continue to provide the most affordable vehicles in the market -- one of the key reasons for its popularity.

Tag: COMMODITIES

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