December 03, 2008
Indian auto majors firms meet alloy steel producers on price issue – Report
BL reported that, faced with the imminent possibility of another round of price hike in the automobile sector, India’s top automobile manufacturers met major India steel producers to hammer out a reasonable contractual price for the April to June 2008 quarter.
The meeting was attended by representatives from TATA Motors, Mahindra &Mahindra, Ashok Leyland, Eicher Motors and Hero Honda amongst others and some automotive component manufacturers were also present in the meeting.
An industry official said that "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." 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.
According to official figures made available by Joint Plant Committee of union steel ministry, the bench mark 2mm hot rolled steel, which is the raw material for manufacturing various auto grade steel, has gone up by around INR 10,000 per tonne in the spot market between March 1st 2008 and April 1st 2008.
Last week, Automotive Component Manufacturers Association of India 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. Officials at Automotive Component Manufacturers Association of India said that "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."
