Maruti Suzuki India Ltd, Hero MotoCorp Ltd, Honda Motor Co. and Mahindra and Mahindra Ltd have announced price hike from January.
The COVID-19 pandemic has taken a heavy toll on the entire economy including the sale of cars. Now with automobile companies planning to hike the prices of cars in the new year from January 2021, it might once again push back the demand of cars according to four major automobile company executives.
Maruti Suzuki India Ltd, Hero MotoCorp Ltd, Honda Motor Co. and Mahindra and Mahindra Ltd (M&M) have announced that they would increase the prices from January citing the need to balance rising commodity prices and other input costs.
While other companies like Bajaj Auto Ltd and Royal Enfield have already increased their prices.
“While low discounts post-Diwali this year suggest a mix of lower inventory and sustained demand momentum in the market, price hikes can certainly deter customers from walking into the showrooms. That said, the market has been down for over two years, and this fiscal has been the toughest for the industry ever,” one of the executives cited above was quoted as saying by the Hindustan Times.
Passenger cars, commercial vehicles as well as two-wheelers have seen a sharp price hike of as much as 15 per cent as the industry transitioned to the stricter Bharat Stage VI (BS VI) emission norms, which came into effect for all vehicle categories from 1 April 2020. Automakers began rolling out BS VI-compliant vehicles last fiscal, and Maruti Suzuki was among the first to introduce BS VI-compliant versions of its high-selling models last year.
“While we say that a price hike would lead to lower demand, we must understand that input costs have gone up substantially. For example, the cost of making engine systems under BS VI regime has risen sharply as it now requires catalytic converters, which use much higher volumes of precious metals such as palladium and rhodium. Part of that price hike could not be passed on to the customers last year,” Shashank Srivastava, executive director in charge of marketing and sales at Maruti Suzuki, told Hindustan Times.
According to Bloomberg, while metal prices are up 31% since July 1, copper, lead, aluminium, zinc and crude prices have risen 32%, 16%, 28%, 40% and 24%, respectively, during the same period.
“Prices of raw materials involving metals, plastics and others are up enormously. Rhodium, for example, used to be at $2,000; it is now at $16,000. Since this year, the input costs are up sharply. The price hike has to happen. Higher costs cannot be held back. However, we have to maintain a balance between customer expectations and business prudence,” Srivastava said.
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 "Top Indian car manufacturers are set to increase prices from next year.")
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