Automakers in India are beginning to see relief on their bottom lines due to lower raw materials prices.
Indian automakers specialise in small cars where margins are slim and susceptible to cost pressures. They have been heavily hit by higher prices of key inputs to automotive manufacturing such as steel, aluminium and copper.
However, recent downward movements in prices for such commodities are helping to raise operating prices according to a report in Indian newspaper Mint.
The report notes that steel, which constitutes as much as three-quarters of input costs, is down around 40% from its peak price of $1,080 per tonne, reached in June.
Although automakers have raised prices in response to higher materials prices, they are keeping them at that level in spite of softer market conditions and that is boosting profitability, the report says.
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