Maruti Suzuki raised the prices of all its models this week, immediately sparking a share increase, up as much as 11%, as investors rallied behind the company after months of falling sales levelled out in December.
India’s number one car company lost around US$500m in production due to labour strikes that shut its factories for weeks last summer. It was also hit by a sales slowdown caused by high interest rates and rising fuel costs.
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Sales of small cars, Maruti’s key product, have stalled as the increased cost of credit and ownership deter potential buyers. Maruti’s sales fell 53% in October but were down only 7% last month.
The carmaker, 54.2% owned by Suzuki Motor, raised prices of all its vehicles by between 0.3% and 3.4% because of what it described as adverse foreign exchange movements and a rise in commodity prices.
Domestic rivals Mahindra & Mahindra and Hyundai have already raised their prices and Indian carmakers expect only marginal sales growth at best in the fiscal year that ends in March.
