Input cost surge prompts automakers to raise prices

Tata Motors will take an average price hike of 0.6% , while Toyota Kirloskar will revise prices upwards to “partially offset rising input costs” effective 5 July. (Mint)
Tata Motors will take an average price hike of 0.6% , while Toyota Kirloskar will revise prices upwards to “partially offset rising input costs” effective 5 July. (Mint)

Summary

  • With a majority of car and 2-wheeler makers likely to follow suit, Maruti Suzuki said it was evaluating a price hike

NEW DELHI : Two-wheeler as well as passenger vehicle manufacturers are increasing prices to pass on the impact of high commodity costs and fluctuating prices of steel.

Hero MotoCorp Ltd, India’s largest two-wheeler maker, announced on Friday that it will hike prices by an average of 1.5% across its portfolio.

Toyota Kirloskar Motor and Tata Motors have also announced higher prices. Tata Motors will take an average price hike of 0.6% , while Toyota Kirloskar will revise prices upwards to “partially offset rising input costs" effective 5 July. Prices were raised by 1.5% on an average for its products.

With a majority of car and two-wheeler makers likely to follow suit, Maruti Suzuki said it was evaluating a possible price hike.

“On the price front, we haven’t yet taken any decision, but as usual, we are closely watching the situation. Commodity prices are fluctuating for the last few quarters, they have weakened a little bit, but steel prices have also been fluctuating. So that’s something we are closely watching and, therefore, we have not yet taken a decision in this regard. The reason why some OEMs have been taking price increases is because of the increased commodity prices. If you compare prices with the levels they were two years back, it is still elevated and not all of it has been passed on. In the last two years, this impact on cost has not been passed on because the market was recovering from covid, therefore manufacturers did not take the risk, they did not want to risk the volumes by increasing prices," said Shashank Srivastava, senior executive director, Maruti Suzuki, in an interview.

Registrations of automobiles grew 10% over a year ago in June but saw 8% dip from the previous month, indicating a short-term slowdown in sales, according to the Federation of Automobile Dealers Association (FADA).

“PV segment navigated through a mixed landscape characterized by variable demand, dynamic product portfolios and oscillating market sentiments. With dealers noting sporadic supplies of popular models and aging product concerns of slow moving variants, the segment still experienced an uptick in demand for new models and anticipates rural sales to pick up further pace," said Manish Raj Singhania, president, FADA.

“We are seeing price hikes by manufacturers every few months. If products do not have strong demand, price hikes have a worse-off impact, but for products with waiting period, impact will not be significant. Besides, price-sensitive products such as entry-level two-wheelers will see some impact. Automakers are contending with cost pressures, such as inflation, foreign exchange and commodity shortages, necessitating actions," C.S. Vigneshwar, vice-president, FADA, said.

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