After Maruti, top automakers gearing up to hike prices

After Maruti, top automakers gearing up to hike prices

Usually, automakers increase prices at the beginning of the year in January

 In an unprecedented move, most of the automakers have already hiked prices twice this year so far. Credit: Reuters File Photo

Top automakers are gearing up to hike the prices of their vehicles during the second quarter this year due to a sharp rise in the prices of various essential commodities such as steel and semiconductor parts.

While Maruti Suzuki said it will hike prices during the second quarter without specifying the quantum of the hike, India’s largest two-wheeler maker Hero MotoCorp is increasing up to Rs 3,000 for their bikes.

Usually, automakers increase prices at the beginning of the year in January. In an unprecedented move, most of the automakers have already hiked prices twice this year so far.

“MSIL is expected to hike prices in July ’21, and others may follow the same,” equities research firm Motilal Oswal said.

Read more: Maruti Suzuki India to hike car prices in Jul-Sep quarter amid rise in input costs

Luxury carmaker Mercedes-Benz has also increased the price of select models from the middle of June due to rising input costs and weakening of the rupee, a company spokesperson said.

Meanwhile, homegrown automakers like Tata Motors and Mahindra Group are also actively considering a hike in the prices of their vehicles sometime in the second quarter, sources close to the development told DH.

“Mahindra price hike could be up to 3%”, an industry source said.

Tata Motors is yet to firm up what the price hike could be.

“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”, said an industry source.

In May, Mahindra’s Chief Executive (Automotive Division) Veejay Nakra had said that the company is mulling a price hike which could range between 1.8% and 3% depending on the model.

Last week, Maruti Suzuki announced a price hike for its vehicles from July due to the high cost of Rhodium and Palladium.

It said that steel prices have increased from Rs 38 per kg to Rs 68 per kg while Rhodium has gone up from Rs 19,000 per gram to about Rs 66,000 per gram.

Rhodium has seen the highest price hike for any commodity internationally since the pandemic began last year.

This is used in catalytic converters and helps in reducing emissions.

Maruti already increased the prices of its vehicles by up to Rs 22,500 for select models in April and up to Rs 34,000 in January.

Hero Motocorp increased the price of its vehicles by up to Rs 3,000 with effect from July 1. Prior to this, it had increased vehicle prices by Rs 2,500 in April.

While the price hike by Maruti has led the stock price to a 10% surge between June 21 and 25, Hero Motocorp’s shares have increased but not massively.

“The company has announced a price hike which indicates its ability to pass on commodity cost inflation despite the challenging business environment to improve its margins”, Mitul Shah, Head of Research at Reliance Securities told DH.

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