The Hindu Business Line : Auto cos meet alloy steel producers on price issue

New Delhi, April 4 Faced with the imminent possibility of another round of price hike in the automobile sector, an outcome of runaway steel prices, India’s top automobile manufacturers today met the alloy steel producers to hammer out a “reasonable” contractual price for the April-June quarter.

The meeting was attended by representatives from Tata Motors, Mahindra &Mahindra, Ashok Leyland, Eicher Motors, Hero Honda amongst others. Automotive component manufacturers were also present in the meeting.

Tough on bottomlines

“This kind of a price increase will lead to the de-growth of the entire automobile industry. The two-wheeler industry has already been declining due to restricted financing. With rising steel costs, there will be a limit to which the market will be able to absorb the hike and consequently the bottom lines of automobile companies would get eroded,” said an industry official.

The official cited that the sharp price increase in the domestic steel prices at a time when the prices in Russia and China are comparatively lower would make India made vehicles uncompetitive in the overseas market.

The bench-mark 2 mm hot rolled steel, which is the raw material for manufacturing various auto-grade steel, has gone up by around Rs 10,000 per tonne in the spot market between March 1 and April 1, according to official figures made available by the Joint Plant Committee of the Steel Ministry.

Last week, ACMA had also sought Government intervention stating the need to control prices in the absence of which the industry would be rendered uncompetitive both in the export market. “Most auto-component manufacturers are almost completely dependant on steel raw material for manufacturing high tech and safety critical components transmissions, engine and engine parts, steering gears, suspensions as well as a host of sheet metal parts that are used in vehicle bodies and chassis,” ACMA said last week.

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