To offset the impact of rising steel cost, leading automakers are reportedly planning to hike the prices again in the first quarter of next fiscal (FY22). A number of car manufacturers in India have already raised the prices twice in the post-lockdown period.
The auto companies are considering an upward revision in vehicle rates by 1-3 percent in April-May, Times of India reported on February 15.
The planned move, though being described as essential by manufacturers, is expected to pose a fresh challenge to the automobile sector which is still recuperating from the COVID-19 jolt.
“Raw material costs have been going up sharply and we will take a price increase in the first quarter of FY22," Rajesh Jejurikar, ED (auto and farm sectors), Mahindra Group, told the newspaper.
Eicher Motors MD Siddharth Lal also claimed that the prices may go up in April to absorb the "rising cost of raw materials". The rates of both Royal Enfield and commercial vehicles would be increased, he said.
Also read: Auto companies roll back salary cuts, reward employees with pay hikes
If the prices are raised in Q1 of FY22, this would be the third upward revision of automobile rates in the past six months. The prices were earlier increased in October 2020, followed by another increment in January 2021.
In the latest round of price hike, the rates of Maruti Suzuki vehicles went up by upto Rs 34,000, Hyundai by up to Rs 45,000, Renault by Rs 40,000, Tata Motors by up to Rs 26,000 and Mahindra and Mahindra by around Rs 23,000-Rs 42,000.
“We have already taken a hike last October and another in January," Ashok Leyland's CFO and Director Gopal Mahadevan pointed out, adding that if the steel rates continue to soar they will be left "with no option but to increase prices".
The sale of trucks, which was worst-affected due to the COVID-19 pandemic-induced slowdown, may take a hit by the price hike.
The shift from BS-IV to BS-VI has already compelled the truck makers to increase prices in a negative demand market.
The steel prices, which ideally hovered around Rs 37,000 per tonne, have soared to up to Rs 60,000 few months ago. Cumulatively, the rates have shot up by more than 45 percent since June 2020.
Exclusive | Steel companies face CCI scrutiny for alleged price cartelisation
Apart from the auto sector, the real estate players have also raised apprehensions. A strike was observed at around 20,000 construction sites in Gujarat, as the Builders Association of India and Confederation of Real Estate Developers Association of India (CREDAI) demanded government intervention to stabilise the steel rates.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
