Auto makers will hike prices across models in the new year to offset the impact of rising input costs. The past year has seen prices hikes of essential commodities like aluminium, steel, copper, plastic and precious metals.
Auto makers like Tata Motors, Renault and Honda are going to increase the prices of many of their models in the New Year to offset the impact of rising input costs.
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In the last one year, automakers have witnessed a substantial increase in prices of essential commodities like aluminium, steel, copper, plastic and precious metals. Steel prices have gone up from Rs 38 a kg in March 2020 to Rs 70, while copper prices have risen from $5,200 per tonne to $10,300 per tonne.
For original equipment manufacturers, material costs take up about 75-80 percent of the total cost structure. A rise in input costs therefore impacts profits.
"Prices of commodities, raw material and other input costs continue to rise. An appropriate price hike to at least partially offset this increase in costs seems inevitable in the near to short term," Shailesh Chandra, President of Passenger Vehicles Business at Tata Motors, told PTI.
“We did not pass on the cost increase to the consumers as we did not want to compromise the sales post-recovery, and also we were hopeful that the material costs will soften. The softening has not happened and the commodity prices have been stubbornly high,” Shashank Srivastava, Senior Executive Director, Sales and Marketing, Maruti Suzuki India, told The Economic Times.
Also read: Domestic steel prices to correct in December; cautious on non-ferrous metals: Phillip Capital
Maruti, which reported a 65.7 percent drop in consolidated profit, at Rs 486.9 crore, in the second quarter of this financial year against Rs 1,419.6 crore in the year-ago-period, has already hiked prices three times in 2021 -- in January, June and September. Srivastava says the company is closely monitoring the prices and will “decide appropriately.” According to PTI, Maruti’s price rise in January is likely to vary for different models.
Renault, which sells Kwid, Triber and Kiger in the domestic market, is looking at a "substantial" price increase across all its models from January.
Mercedes-Benz will raise prices by up to 2 percent on select models from next month, while Audi will hike prices by 3 percent across its entire model range with effect from January 1.
Although Honda Cars India did not reveal a timeline for the price increase, it is planning to hike prices in the near future due to the pressure of input cost.
(Edited by : Shoma Bhattacharjee)
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