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Maruti sets stage for price hikes in 2024
Mahindra and Mahindra and Tata Motors also plan to raise prices for their automotive products in January.
New Delhi: India’s largest carmaker Maruti Suzuki India Ltd on Monday said it will raise prices beginning 1 January, setting the stage for similar hikes by rival automakers. The company attributed the move to higher commodity costs and steep inflation, but did not specify the quantum of price hike for specific models.
“Steel prices have firmed up a little over the last 3-4 months, which accounts for around 38% of our commodity buying. We have been estimating the impact of the volatility of commodity prices on our costs, and trying to cut costs internally and then take price hikes as a last resort. We are observing volatility mainly in commodities and we also observe inflationary trends will be on the higher side," Shashank Srivastava, senior executive director, Maruti Suzuki said in an interview.
Automakers typically raise prices of passenger vehicles in the new year to coincide with model year changeover, or the new financial year. Executives of other automakers also confirmed their price hike plans.
“Based on the inflation and commodity prices outlook, we intend to take a price increase for our automotive products effective January 2024 , the details for which will be announced closer to the time," Nalinikanth Gollagunta, CEO, automotive division, Mahindra and Mahindra said.
M&M is evaluating price hikes for its farm equipment business as well. “We are constantly monitoring input economic parameters playing out in the market and any decision regarding price adjustments will be made after careful consideration of the prevailing economic scenarios," Hemant Sikka, president, farm equipment sector, Mahindra and Mahindra said.
Tata Motors too said it will raise prices across its passenger vehicle and electric vehicle range at the start of the new year. A Tata Motors spokesperson said the carmaker will announce the extent of the hike and exact details over the next few weeks.
“We are giving notice to customers who’ve made bookings with us that we are taking price hikes. In some models, the price hikes will be substantial. Our last price increase was in April this year at 0.8%. In 2022, we took two price hikes at 1.3% in April and 1.1% in January," Maruti’s Srivastava said.
“Material cost constitutes approx 70-75% of net sales among carmakers and any change in the material cost directly impacts the cost structure. The recent hike in steel prices is expected to put pressure on the cost and push vehicle makers to hike vehicle prices. We need to watch how carmakers manage the trade-off between price hikes and increased discounts as there are already hefty discounts offered among multiple segments. With disposable incomes under stress, amid a high inflationary environment and slowing growth, passing on the high cost will be a challenge," Gaurav Vangaal, associate director, S&P Global Mobility said.
Maruti’s Srivastava said that passenger vehicle stock levels towards the end of November, after the festive season, are high at around 30 days, with inventories for some models going up to 45-60. However, he said while December is likely to witness strong retail sales as both manufacturers and dealers push to liquidate last year’s stock. “However, we do not foresee that schemes will be higher than current levels," he said.
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Business NewsAuto NewsMaruti sets stage for price hikes in 2024
First Published:27 Nov 2023, 10:30 PM IST
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