Car buyers will have to pay more for their new vehicle from January. At least four automakers have declared their intention to increase prices due to pressure on costs and general inflation.
The largest passenger car manufacturer in the nation, Maruti Suzuki India Limited (MSIL), said on Monday that it will increase the cost of its models starting in January. The market leader in electric passenger car manufacturing, Tata Motors Limited (TML), has announced that it will raise prices across its whole range in January, though it has not yet disclosed how much. In the upcoming year, Mahindra & Mahindra will also increase the cost of its car goods.
Those who purchase luxury cars will also have to spend more money. Beginning in January, Audi India has announced price increases of up to 2% for all models. A Mercedes-Benz India representative stated that the business was thinking about raising prices in the upcoming year when approached.
The automakers justified their plans for price increases by pointing to significant cost pressure from general inflation and rising commodity prices.
The firm has planned to raise the costs of its cars in January 2024 because of increased cost pressure brought on by general inflation and rising commodity prices, according to a regulatory filing by MSIL.
It said that even if MSIL uses “maximum efforts” to cut costs and counteract the increase, it could have to pass along some of the additions to the consumer. The price rise will differ for each model.
Meanwhile, a TML representative told Business Standard, “We are considering raising the prices of all our passenger and electric vehicles in January 2024. The precise specifics and scope of the hike will be revealed in a few weeks.
MSIL’s senior executive officer of marketing and sales, Shashank Srivastava, brought up the subject of commodity price volatility. He told Business Standard, “There is also a general inflationary pressure, and steel prices have been firming up since July.” He went on to say that an estimate of the total cost increase is made, and a decision to raise prices is made based on that estimate. In April of this year, MSIL increased prices by 0.8%.
Nalinikanth Gollagunta, CEO of Mahindra & Mahindra’s automotive sector, stated, “We intend to take a price increase for our automotive products effective January 2024” based on the outlook for inflation and commodity costs. Announcing the specifics will happen “closer to the time.”
Starting on January 1, Audi India’s car prices outside showrooms will rise by up to 2%. “Achieving profitability through a sustainable business model remains a critical part of Audi India’s strategy, and we are committed to providing the best to our customers,” stated Balbir Singh Dhillon, head of Audi India. The brand’s premium price positioning has been maintained despite a price correction across our model range due to increased input and operating costs associated with the supply chain.
According to him, the price increase is intended to secure sustainable growth for Audi India and its dealer network, and the business will make every effort to minimize the adverse effects on consumers.
In the first nine months of this year, Audi India sold 5,530 cars, representing an 88% gain. Of these, the Audi SUV lineup increased by 187% between January and September. By contrast, the premium vehicle manufacturer sold 4,187 cars in 2022—a 27% increase.
Dealers said that December will likely continue the general growth momentum at the retail level. “Thanks to improved MSPs for their crops, farmers in states headed for elections have more money in hand, and the harvest has outperformed last year.” Overall, we anticipate that the trend will continue, according to the president of the Federation of Automobile Dealers Associations (FADA), Manish Raj Singhania. He said discounts are still available for models for which dealers have stock, but SUVs are rarely discounted.
According to Srivastava, some clients might postpone their purchases until December due to the upcoming price increase in January.
Axis Securities analysts stated in an October research that they anticipated gross margin improvements for auto original equipment manufacturers (OEMs) and ancillaries in the September quarter of FY24, as the incremental benefit of commodity prices persisted in Q2FY24. The report stated, “In Q2FY24, steel HRC prices corrected by 4% on a quarter-over-quarter (QoQ) basis, while platinum/aluminum/copper/zinc declined by 9%/5%/13%/1% on a QoQ basis.”
“The commodity tailwind for the auto sector will likely diminish QoQ in H2FY24, but we don’t foresee the high commodity inflation that prevailed last year. Overall, the commodity complex is likely to be benign in H2FY24,” it said.
