Senior officials at Mahindra and Mahindra claim that the high cost of raw materials is shrinking their profit margin and hence the company is planning to hike the prices of all its categories of vehicles from January 2011.

The prices of steel and rubber are increasing which has increased the input costs for Indian automobile companies and thus will be reflected in the final prices. M & M raised its prices in October this year by 1%-2% varying on the kinds of models. This time, the hike would be in both the passenger as well as the commercial vehicle segment.

Within the first half of next year, the company has also announced a new pickup truck which would have a carriage of 1.2 tonnes.

Experts believe that the price rise was inevitable as the rubber prices had doubled and the metal prices had also gained 3-4 percent which were shrinking the margins.

Another company in the M & M league to raise prices would be Tata Motors. It has already indicated that most models would see a price hike of 1-1.5 percent except Tata Aria and Tata Nano whose prices will remain constant.