Due to 10-12% increase in truck fares, some companies like MG Motor said that they are planning to increase the price.
Rising fuel costs are having a major impact on manufacturing costs in the auto industry, which can result in an increase in vehicle prices. On Thursday, RBI Governor Shaktikanta Das also said that rising fuel prices impact manufacturing costs. According to auto companies and transporters, truck fares have increased 10–12% in the last 10 months and most companies are currently negotiating freight rates.
In such a situation, some companies like MG Motor said that they are planning to increase the price. Typically, freight comprises 2–2.5% of the cost of the car. Rajiv Chaba, president and MD, MG Motor India, said, “Due to the increase in sea freight and 10-12% increase in truck fares, we have to increase the price by about 2-3%.” The company is currently negotiating these rates with transporters.
Product delivery costs also increased
For trucking, about 45% of the cost is due to fuel and fuel prices have risen 65-fold since the introduction of the Kovid, with total increases above 30%. Deepak Garg, founder and CEO of logistics startup Rivigo, said the trucking industry could face difficulties due to rising fuel prices. E-Express founder and CEO TA Krishnan, who works with e-tailers such as Amazon India and Flipkart, said that negotiations are already underway with e-commerce firms to reflect the rising delivery costs. is.
Increasing expenses, both direct and indirect
Online food delivery firm Swiggy is also finalizing a new payment structure for its delivery partners in view of rising fuel prices. Zomato said on Thursday that it will increase the payment of its delivery partners so that they can manage the increased cost of fuel. In such a situation, it will be obvious that the impact of increasing fuel prices on customers’ pockets will be both direct and indirect.
Kamal Nandi, business head and executive VP of Godrej Appliances said that most transporters mainly use diesel in their vehicles. Since July 2020, diesel prices have steadily increased by 11.3% and this is affecting fares. Nandi said, “This is expected to affect prices and consumer demand.” Most companies are spending more for raw materials.