Luxury automakers hike prices up to 3% amidst rising material costs

Amid mounting inflationary pressures, escalating material costs, and rising operational expenses, luxury carmakers Mercedes-Benz India and BMW India have announced price increases of up to 3 per cent on their entire model ranges effective from January 1, 2025.

 

Mercedes-Benz India will revise ex-showroom prices by Rs 2 lakh to Rs 9 lakh, depending on the model. This adjustment will impact vehicles such as the GLC SUV and the high-end Mercedes-Maybach S 680 limousine. The company cited increased material costs, fluctuating commodity prices, and higher logistics expenses as key factors behind the price adjustment, although the company has been absorbing much of these cost pressures for the past three quarters.

 

Santosh Iyer, managing director & CEO of Mercedes-Benz India, explained, "To ensure the sustainability of our business, we have decided for a nominal price correction. While we have been absorbing these cost pressures by optimising our operational costs, the overall bottom line is getting impacted due to the current challenges."

 

BMW India has also announced a similar 3 per cent price hike across its range of models, including locally produced cars such as the BMW 2 Series, 3 Series, and 7 Series, as well as its popular SUVs like the BMW X1, X3, X5, and X7. The price increase will also affect imported models, including the BMW i4, iX, and the M-series cars.

 

The price adjustment is in response to rising input costs and inflation, according to the company. BMW cites this as a response to shifting market conditions, inflation, and increasing input costs.

 

Analysts believe that the 3-5 per cent price hike is becoming a standard adjustment for the industry as a whole, given the rising costs of raw materials, logistics, and currency fluctuations.

 

Anurag Singh, managing director of Primus, said, “The input costs for auto companies, especially luxury carmakers heavily reliant on imports, are rising due to the high import content and rising US Dollar. While December is traditionally a month for discounts, January typically sees price increases.”

 

Singh believes that a 3-5 per cent price hike is necessary for the industry to maintain profitability in the current economic climate. He also pointed out that December is typically a month of discounts in the automotive market, making it difficult for manufacturers to pass on price increases before the new year.

 

Despite the price hikes, both Mercedes-Benz and BMW are making efforts to cushion the impact on their customers by providing flexible financing options. These include reduced interest rates, attractive monthly payments, and extended term-end opportunities. Moreover, both companies are offering price protection for customers who book vehicles before the price revision takes effect in January 2025.

 

As inflationary pressures continue to affect the automotive sector, these price adjustments are expected to be a trend across the luxury car market in India and could set the tone for other carmakers to follow suit.