MADRAS, India - India's largest truck maker, Tata Engineering and Locomotive Company (TELCO), said on Tuesday it planned to raise prices of its Indica car shortly.
Rajiv Dube, vice-president of the company's car unit, told reporters the planned price rise was due to an increase in input costs.
"There is pressure on us to increase prices and we will be doing so in the very near future," he said.
"We have reached a point where we are no longer able to negate the increase in the cost of inputs."
The prevailing sluggish conditions in the new car market would, however, moderate the price increase, Dube said.
"Except in June, the overall market has generally been in a decline this year and so our increase, when it happens, will be in line with what we think is the market's capacity to absorb."
After dipping 13.6 percent in April and 9.7 percent in May, new car sales in India rose 5 percent in June from a year earlier, helped by a surge in sales of Indica and Fiat's Palio.
TELCO said two weeks ago it had sold 7,056 Indicas in June, 48 percent more than a year earlier, which made it the best-selling car in its category that month.
The 1.4-litre Indica is a key player in the B-segment -- consisting of sub-compact cars that cost between 300,000 and 500,000 rupees.
This segment accounts for half of India's nearly 600,000-vehicle-a-year new car market.
Other competitors in this segment include the 1.1 litre Santro made by the Indian unit of Korea's Hyundai Motor Co. and the Zen and Wagon-R hatchbacks made by India's largest carmaker, the majority Suzuki-owned Maruti Udyog Ltd.
Dube said TELCO would sell more than 100,000 cars and utility vehicles in the Indian market in the current year to March 2003, against 89,000 last year.
He said TELCO would launch a sedan version of the Indica this year, a more powerful sport variant of the Indica early in 2003 and another version around April 2003.
TELCO, which is also India's third-largest maker of cars and utility vehicles, returned to the black this year with a profit of 1.62 billion rupees ($33.3 million) after seven quarters of losing money.