In the Indian market, car companies are not only facing upward pressure on the cost of spare parts procurement. The new emission standards to be implemented will also increase their costs. In order to ensure profits, car companies have to find ways to pass on these costs.
Parts purchase costs increase
Component suppliers are forced to increase the supply prices of parts and components due to the pressure of rising raw materials and the rising pressure of internal human resources costs.
There have been frequent outbreaks of strikes in the Indian auto parts industry, such as the Bosch India factory and Denso India factory. The reason is: With the increasing demand in the Indian automotive market, workers began to become emboldened, and they all threatened with strikes and asked employers to give them a raise. In order to ensure smooth production and timely delivery of orders from OEMs, employers will make concessions.
When parts suppliers in the lower part of the supply chain cannot afford the cost pressure, they can only pay for it by the automaker.
New emission standards
Starting from April 1, 13 major cities in India will begin to implement the Euro IV emission standards, which also means that the cost of auto companies will increase.
Rajiv Dube, head of the Tata passenger vehicle division in India, said that car companies could not absorb all the rising costs. The increase in the cost of spare parts purchases has given us enough headaches. We have to pass on the increased costs of implementing the Euro IV emission standards. Consumers.
According to Surjit Arora, an analyst at Prabhudas Lilladher, a market research company, the Euro IV emission standard will increase prices by between 5% and 6%, including consumption tax.
Dilip Chenoy, director of the Society of Indian Automobile Manufactuers, said in an interview with the Hindustan Times that due to the impact of new emission standards, the Indian car market will decline sharply in April this year. Commercial vehicle sales.
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