BackMaruti Suzuki to hike vehicle prices from April as input costs rise
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 hike if raw material prices keep rising
PremiumNew Delhi: Maruti Suzuki India Ltd will increase prices of its vehicles across categories from April due to a substantial rise in input costs like steel, copper and crude oil globally.
The country’s largest passenger vehicle manufacturer 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 hike if raw material prices keep rising. Other carmakers are also likely to follow the market leader and announce price hikes of their respective products.
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“Over the past year the cost of company's vehicles has been impacted adversely due to increase in various input costs. Hence, it has become imperative for the company to pass on some impact of the above additional cost to customers through a price increase in April, 2021. This price increase shall vary for different models," the New Delhi-based company said in a regulatory filing.
The local unit of Suzuki Motor Corp though did not specify the quantum of jump it sees in prices of its vehicles.
According to sector analysts, despite a double-digit growth in revenues and net profit for the third quarter of the current fiscal, Maruti Suzuki India Ltd’s operating profit and margins might remain subdued in the next quarter and FY22, as the company could find it difficult to offset the impact of rise in commodities and other costs.
While the demand environment is strong, cost absorption would be gradual keeping margin in check for FY22. "We lower our FY21E/FY22E EPS by 6%/2% to factor in higher cost, which is diluted by volume upgrades, lower depreciation, and higher other income," said analysts of Motilal Oswal Institutional Equities in a note.
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