Auto industry faces new-year dilemma as cost pressures rise but anti-profiteering checks intensify

Companies expect deeper scrutiny of any price action that appears inconsistent with the intent of the GST reduction

Automakers may find it harder than usual to push through their customary New Year price hikes, as government scrutiny over potential anti-profiteering is tightening just as input costs begin to climb again. Senior industry executives told Moneycontrol that the backdrop this year is far more complicated than the routine 1–3 percent January increases the sector typically undertakes.

Multiple government bodies are tracking post-GST pricing behaviour more closely after the tax cut of September 22, 2025. Oversight now rests with the Directorate General of Anti-Profiteering (DGAP), which investigates potential violations, and the Competition Commission of India (CCI), which adjudicates cases and issues final orders. With the enforcement architecture shifting to CCI since the abolition of the National Anti-Profiteering Authority in 2022, companies expect deeper scrutiny of any price action that appears inconsistent with the intent of the GST reduction.

This has made automotive firms far more cautious. “Even if there is genuine cost inflation, the timing of a January hike will be examined very closely,” said a senior executive at a leading passenger vehicle manufacturer.

Cost pressures, meanwhile, are quietly resurfacing. Prices of copper, aluminum, iron, titanium, nickel, and glass have risen steadily in recent weeks, driven by strong demand from multiple manufacturing sectors. Steel and rubber have softened, but the relief is marginal compared to the broader uptick.

The rupee’s weakness has also inflated landed costs for automakers dependent on imported electronics, sensors, EV components, and precision metals.

“The last few weeks have been difficult—commodity costs are turning north, and the rupee has added another layer of pressure,” another senior executive said. “But given the current regulatory environment, a broad January price increase will not be straightforward.”

The industry has been running at high capacity since the GST cut sparked a surge in retail demand. October 2025 saw the highest-ever monthly production in India’s automotive sector, while November registered the best November sales on record. Companies now worry that a sudden price increase could stall the momentum, particularly in price-sensitive mass segments.

Analysts say carmakers are caught between competing pressures. “Manufacturers can justify price hikes on the basis of input inflation,” one analyst said. “But with CCI in charge of anti-profiteering adjudication, companies will need to demonstrate clearly that any increase is unrelated to the GST cut.”

Automakers are evaluating staggered hikes, selective revisions for certain models, and partial cost absorption until commodity trends stabilise or regulatory clarity improves. Negotiations between OEMs and suppliers on sharing the cost burden have also intensified.

If current conditions persist, 2026 may begin without the across-the-board January price revisions Indian consumers have come to expect. Caught between financial prudence and regulatory caution, the auto industry appears set for a more subdued start to the new year.