Tyre, auto-component firms hint at fresh price hikes amid input cost rise

Tyre and auto-component makers raise prices as raw material and energy inflation erodes margins

Auto-component and tyremakers are raising prices as raw material and energy costs squeeze their operational margins, and industry leaders warn more increases are likely if inflation doesn’t cool down.

 

Companies listed rising prices of natural rubber, steel, aluminium, copper, freight and energy as key challenges in the fourth quarter of FY26 (Q4 FY26). They noted that costs are passed on to automobile manufacturers after a lag.

 

Arnab Banerjee, managing director and chief executive officer of Ceat, said the tyre company increased prices by around 5 per cent between March and April. It may take another 5 per cent hike during May-June. According to Banerjee, raw material costs have increased by 13-15 percent, making further calibrated pricing actions necessary for profitability. The company will balance price hikes and market competitiveness, as aggressive increases could moderate demand, said Banerjee.

 

Apollo Tyres said it has announced price increases of 6-8 percent for Q4 FY26. Gaurav Kumar, the company’s chief financial officer, indicated that the hikes have not fully offset cost inflation and more may be required in the coming months.

 

Executives noted that pricing adjustments vary by segment. Original equipment manufacturer contracts typically allow indexed price revisions with a one-quarter lag, while export markets see a shorter lag due to existing order pipelines. Consequently, this delayed cost recovery will keep near-term pressure on margins despite recent price hikes.

Auto-component firms

Auto-component makers echoed these concerns. Sona BLW Precision Forgings (Sona Comstar) said that inflation in steel, aluminium and copper, alongside higher freight and energy costs, hit Q4 FY26 profitability. The company noted that while most commodity inflation is passed on to customers, timing differences continue to weigh on margins.

 

Ramkrishna Forgings said it is in discussions with customers to recover higher energy and gas costs. The company noted that while steel costs are largely pass-through in nature, energy-related increases are harder to recover immediately.

 

A recent study by Crisil Ratings said that prolonged supply-chain disruptions and high crude oil prices due to the West Asia conflict could shave nearly 200 basis points off India Inc’s operating profitability in FY27. 

 

The ratings agency said auto-component makers have “limited flexibility” to pass on higher production costs in the aftermarket and could face lagged recovery of higher input and freight expenses. It added that for several crude-linked sectors, including auto components, the inability to immediately pass on costs could weigh on profitability despite relatively resilient demand conditions.

 

“Managing costs and profitability will be a bigger challenge than achieving top-line growth,” said Subodh Rai, managing director of Crisil Ratings, adding that companies with stronger balance sheets will remain resilient despite margin pressures.

 

Executives from both industries said the current environment reflects a broader global manufacturing challenge, as persistent input inflation and geopolitical uncertainties force companies to adjust pricing without hurting retail demand or competitiveness. 

Under pressure

• Experts suggest calibrated pricing is necessary as material costs soar
• Export markets see a shorter lag in pricing adjustments compared to OEMs