Despite the slowdown in the commercial vehicles industry, various truck manufacturers in the country are in a mood to increase prices to defray higher raw material costs. Truck prices are set to go up by anywhere between Rs 6,000 and Rs 30,000, depending upon the type of the vehicle. Tata Motors has said it would increase prices of all ranges of commercial vehicles by 2.5 per cent with effect from Monday. Mahindra and Mahindra has increased the prices of the high-end models by Rs 7,500 with effect from October 1. The Ashok Leyland’s Managing Director, Mr R. Seshasayee, said on Tuesday that the company too may raise prices, perhaps by 1.5 to 2 per cent. Although new safety regulations require anti-lock braking systems (ABS) to be fitted on certain (heavy) types of commercial vehicles, vehicle OEMs are planning across-the-board price hikes.

Timing and Season

The timing of the price increase is significant, as it is a little ahead of the festival season. Vehicle manufacturers are hopeful that the ‘season’ would offer sufficient counterweight to any hike-induced dampening of business. Mr S.M. Bafna, Chairman of the Mumbai-based Bafna Motors, one of the larger dealers of Tata Motors, feels that price increases at this stage “does not make much sense” and would “definitely hamper” sales. He feels that those manufacturers who do not raise prices would be at an advantage. Mr R. Sridhar, Managing Director, Shriram Transport Finance Company, which finances truck purchases, agrees, but says that any resistance to the price hikes would be only temporary. “There is festival season ahead, monsoons are good, freight availability is there, freight rates have gone up by 4 per cent over the last five months and interest rates are beginning to ease off,” he said.

Agriculture

Sources also point out that agricultural production, a sore point in an otherwise buoyant economy, grew by 3.8 per cent in the first quarter. A fleet owner in the trucking centre of Namakkal felt there would not be any significant effect due to the increase and the demand for new trucks would continue. “Ashok Leyland already gives a discount on its 2,214 models.