According to reports, vehicles across major segments will likely get more expensive in the coming weeks. Vehicles including passenger vehicles, small cars, sports utility vehicles, sedans, and two-wheelers will get costlier. This is to accommodate all of the surging material costs.
Leading this is Maruti Suzuki, who announced on Wednesday that they would be hiking their vehicle prices again this month. This is to help with the negative impact of various increased input costs. This will be the fifth price hike for the company in the last 16 months.
The material costs, that amount up to 75% of the total costs of a vehicle, were expected to lower. But there are no improvements so far. “The expected softening in material costs- which have risen very sharply in the last 18-24 months- has not happened. We have taken internal measures to improve efficiency and productivity. However, given the unprecedented increase in the cost of raw materials like steel, copper, plastic, aluminium, and rare materials like palladium, we have to pass on some of the costs to our customers as a last resort,” said Shashank Srivastava, who is the senior executive director (marketing and sales) for Maruti Suzuki.
Many brands like Hero MotoCorp, Honda Cars India, and Toyota Kirloskar Motor already have adequate measures in line. They have increased prices this month to balance out all material costs. It is believable that other carmakers will also follow suit.
Tata Motors, too took a step in a similar direction. Most commodities have gotten more expensive. And due to the rise in semiconductor prices as well, it is only understandable that the company will look at a price increase. Bajaj Auto is also looking at a price hike, Volkswagen may go up to a 3% raise, and Maruti Suzuki has already hiked prices four times (and around 8.8%) in the last 3 months! Hyundai has no plans to increase prices as of now.
“Reduced supply, increased demand: It all adds up to higher prices for the new-car buying public. With the chip shortage limiting the number of vehicles they can build, companies shifted production to high-profit models, which means expensive. We are witnessing significant pricing activity. In January, we had 743 price changes, in March 180 price changes, and in April we already have 244 price change announcements. This is significant considering there are just 1200 unique product versions in the market.”Ravi Bhatia, president of the consultancy firm Jato Dynamics.
Prices are expected to only increase in the coming months. Coupled with rising fuel prices, and it looks like it is going to be a rough time for both the buyers and the automobile industry.