Inflationary dent: Automakers plan price hike on rising input costs

Several automakers have decided to hike prices of select models from January 2022 on the back of rising input costs.

Citing increase in input costs, automobile major Maruti Suzuki India said that it will hike prices of select models with effect from January 2022.

“Over the past year, the cost of the company’s vehicles continue to be adversely impacted due to increase in various input costs,” the company said.

“Therefore, it has become imperative for the company to pass on some impact of the additional costs to the customers through a price hike. The increase shall vary for different models. On an average, material cost accounts for 70 per cent of our overall cost structure,” it added.

According to Vinod Nair, Head of Research at Geojit Financial Services: “It becomes imperative for the company to pass on some impact to the customers by way of price increase. We expect the demand to pick up gradually by Q4 due to easing commodity costs and less semiconductor shortages.”

Similarly, luxury car manufacturer Audi said that it will hike prices by up to 3 per cent for all models citing rising input and operational costs.

“To offset rising input and operational costs, a price correction is necessary. The new price range of our select vehicles will ensure the brand’s premium price positioning, thereby ensuring sustainable growth both for the brand and our dealer partners,” said Balbir Singh Dhillon, Head of Audi India.

In consonance with rising input costs, Mercedes-Benz too will raise the ex-showroom price of its select models by up to 2 per cent, effective January 1, 2022.

“In line with the continuous increase in input costs led by steel, aluminium etc., automakers are increasing prices of vehicles to maintain profitability,” said Ashwin Patil, Senior Research Analyst at LKP Securities.

“This move shall not impact demand significantly, since customers are waiting for production to normalise given the fact that semiconductor chip availability has been haunting the sector,” Patil added.

Buyers may ignore the price hike and demand will strengthen, Patil added.




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