Maruti to hike prices from April 1, other firms may follow as costs rise

India's largest carmaker will make a second round of price increase since January

Maruti Suzuki India on Monday said it will increase prices across models from next month as it seeks to offset the impact of high input costs.
 
The company, however, did not specify the quantum of hike but said the price increase will vary for different models.
 
This is the second round of price hike that the automaker is taking within three months.
 
On January 18, the company had announced price hikes on select models by up to Rs 34,000 due to a rise in input costs. Most other firms had also raised prices and hinted at another round of hike if commodity prices continue to rise.
 
Taking a cue from Maruti, other companies, too, are likely to hike prices by 1-3 per cent in the coming weeks to offset input cost pressure, especially in steel. The hikes, however, will be undertaken carefully, so that it doesn’t impact sales adversely. Fuelled by new launches and economic recovery, auto sales in India have been on an upswing.
 
Domestic hot-rolled coil (HRC) prices rallied to a multi-year high of nearly Rs 56,000 per tonne in February 2021 from Rs 39,200 per tonne in March 2020. This is because demand improved amid iron-ore sup­ply constraints and high global prices. Prices of other commodities in the international market, including tin and copper, have jumped 32.3 per cent and 14.7 per cent, while aluminum prices are up 7.8 per cent 
 
Over the past year, cost of vehicles has been impacted adversely due to an increase in various input costs, Maruti said in a regulatory filing on Monday. “Hence, it has become imperative for the company to pass on some impact of the above additional cost to customers through a price increase in April 2021,” it added.
 
Aditya Makharia, vice-president, HDFC Securities, said the impact of commodity price inflation has been between 200 and 300 basis points across OEMs (original equipment manufacturers).
 
“Expect the industry to raise prices to partially offset the costs,” said Makharia.
 
He pointed out that given the strong demand in the passenger vehicle (PV) segment, the price hike may not impact PVs but will hit two-wheelers as demand is still weak.