Maruti Suzuki had increased prices of its offerings in January to offset the rise in input cost and the management had guided for another round of price increase if the input cost keep rising
Maruti Suzuki India Ltd – country’s largest passenger vehicle manufacturer – on Friday announced decision to increase price of its vehicles by around 1.6% on an average, across its product portfolio, as a result of substantial increase in prices of commodities like steel, copper and crude oil in the international market.
The New Delhi based company had increased prices of its offerings in January to offset the rise in input cost and the management had guided for another round of price increase if the input cost keep rising. Other carmakers are also likely to follow the market leader and announce price hikes of their respective products.
“This is to inform you that the Company is increasing the price for select models owing to increase in various input costs. The weighted average price increase in ex showroom prices (Delhi) across models is 1.6%. The new prices are effective from today i.e. 16th April, 2021.," the company said in a regulatory filing.
The local unit of Suzuki Motor Corp though did not specify the quantum jump in prices of each and every product.
According to sector analysts, despite an expectation of double-digit growth in revenues and net profit for the fourth quarter, Maruti Suzuki India Ltd’s operating profit and margins might remain subdued in the next quarter and FY 22, as the company might find it difficult to offset the impact of rise in commodities and other costs.
“MSIL has already seen a 300bp impact of a sharp commodity price inflation in 3QFY21. Based on spot prices of key commodities, we expect further cost inflation (of 200-250bp) in 1HCY21. We see several levers to margin from the base of 3QFY21 via price increases (300bp), discount moderation (100bp), operating leverage (50bp), product mix improvement (not factored into our estimate)," said analysts of Motilal Oswal Institutional Equities.