1 hr ago
Auto Makers Raise Prices as Costs Squeeze Margins, Test Demand
Car companies are paying more for materials and moving vehicles through supply chains.
These higher costs reduce the money companies make on each vehicle.
To manage this, they are raising vehicle prices in stages.
Maruti Suzuki India plans to increase prices by up to ₹20,000 on some models from September.
Tata Motors, Mahindra and Hyundai have also raised prices this year.
Higher prices could make some customers delay buying cars, especially cheaper models.
Companies may offer discounts and other deals during the festive season.
Analysts still expect demand to remain strong in the near term.
They also expect the festive season and GST rate rationalisation to help sales.
Maruti Suzuki India will raise prices by up to ₹20,000 on select models from September.
The increase is Maruti Suzuki India’s third price revision since May and follows higher raw-material and supply-chain costs.
Tata Motors, Mahindra and Hyundai have also introduced staged price increases this year.
Analysts say repeated hikes could slow sales growth, especially in the mass-market segment, but are unlikely to halt near-term momentum.
Automakers are expected to use discounts, exchange bonuses and dealer incentives during the festive season to support demand.
- Who
- Maruti Suzuki India, Tata Motors, Mahindra, Hyundai and other automobile companies; analysts and automobile dealers also commented.
- What
- Automakers are raising vehicle prices in stages to offset higher raw-material, commodity and supply-chain costs.
- Where
- India.
- When
- Maruti Suzuki India announced its latest increase on Monday, effective from September; other increases have occurred this year.
- Why
- Elevated inflation, commodity costs and supply-chain disruptions are squeezing margins, prompting manufacturers to pass some costs to customers.
Automakers Must Recover Higher Costs
Higher Prices Could Weaken Affordability
Need for price increases
Automakers Must Recover Higher Costs
Automakers say elevated inflation, commodity costs and supply-chain pressures require them to pass part of the increased costs to customers.
Higher Prices Could Weaken Affordability
Dealers and analysts warn that repeated price increases could affect purchase decisions and reduce the affordability benefit from the GST cut.
Effect on demand
Automakers Must Recover Higher Costs
The industry expects strong demand, the festive season and GST rate rationalisation to support continued sales momentum.
Higher Prices Could Weaken Affordability
Analysts expect price hikes to act as a speed breaker for growth, particularly in the mass-market segment, even if they do not derail momentum.
Ways to protect buyers
Automakers Must Recover Higher Costs
Automakers are expected to use discounts, exchange bonuses and dealer incentives to cushion the impact of higher list prices.
Higher Prices Could Weaken Affordability
Such measures may soften the effect, but the underlying vehicle prices are still rising as cost pressures persist.
Key facts
- Latest Maruti increase
- Up to ₹20,000 on select models
- Effective date
- September
- Maruti price revisions
- Third revision since May
- Other companies raising prices
- Tata Motors, Mahindra and Hyundai
- Main cost pressures
- Raw materials, commodities and supply-chain disruptions
- Demand outlook
- Price increases may moderate growth but are not expected to derail near-term momentum
- Expected customer support
- Discounts, exchange bonuses and dealer incentives during the festive season
Quotes
Maruti Suzuki India
Indian automobile manufacturer issuing a statement to stock exchanges
“For the past few months, the company has been making continuous efforts to mitigate the cost impact to the extent possible through cost reduction measures. However, with inflationary burdens at elevated levels and the adverse cost environment enduring, the company is constrained to pass on a portion of the increased costs to the market.”
telegraphindia.com
Leelavati Shetty
Director at Beacon Capital Advisors
“Price hikes could moderate the pace of growth, particularly in the mass market segment, as they partially offset the affordability benefit from the GST cut. But with strong demand and the upcoming festive season, we don’t expect price increases alone to derail the current momentum.”
telegraphindia.com
Sources
Related news
Tata, Hyundai Raise Car Prices as Industry Costs Mount
Maruti Suzuki Raises Select Model Prices by Up to ₹20,000
Tata Motors to Raise Vehicle Prices Up to ₹25,000
Hyundai Motor India Announces Up To 1% September Price Hike
Tata Motors Plans Price Hikes as Commodity Costs Rise
Tata Motors weighs more price hikes amid commodity pressure
JLR Confirms 4,000 Job Cuts Amid Two-Year Transformation
Jaguar Land Rover Plans 4,000 Jobs Cuts Amid Global Pressures
Global roundup covers crashes, disasters, tensions and economic shifts
