Carmakers to jack up prices in January 2025

In the luxury car market, BMW India and Audi announced that they would increase prices by up to 3 percent across the model range due to rising input and transportation costs

Despite resorting to deep discounts amidst a sales slowdown, carmakers across the board have decided to go for a price revision next month in order to partially offset the impact of rising input costs and increased operational expenses. Some leading automakers like Maruti Suzuki, Hyundai, Mahindra and Mahindra (M&M), JSW MG, BMW, and Audi have announced price hikes in the range of 1-4 percent effective January 1, 2025.

Some carmakers like Maruti Suzuki have stated that price adjustments will vary depending on the model. Hyundai, M&M and BMW are also echoing similar strategies to maintain profitability.

Starting January 1, the prices of Maruti Suzuki models will go up by up to four percent, depending on the model and variant. “While the company continuously strives to optimise costs and minimise the impact on its customers, some portion of the increased cost may need to be passed on to the market,” said the company's official release.

Hyundai Motor India Limited (HMIL) has also announced that it will raise prices for its entire model range, effective January 1, 2025.  The South Korean carmaker claimed that the price increase has been necessitated by an increase in input costs, adverse exchange rate and increase in logistics costs.

“Our endeavour is always to absorb rising costs to the extent possible, ensuring minimal impact on our customers. However, with the sustained increase in input cost, it has now become imperative to pass on a part of this cost escalation through a minor price adjustment, stated Tarun Garg, Whole-time Director and Chief Operating Officer, HMIL. He also revealed this price increase will be done across models and the extent of increase will be up to Rs 25,000.

Mahindra has also announced a price increase for its entire range of passenger and commercial vehicles, effective January 2025. The company claims that this adjustment is in response to the rising costs due to inflation and increased commodity prices.

“Mahindra has made efforts to absorb as much of these additional costs as possible. However, a portion of this increase will need to be passed on to customers. The extent of the price increase across different SUVs and commercial vehicles will be up to 3 per cent, the company said in a statement.

Another homegrown automaker, Tata Motors, announced today that it will take a price increase of up to 3 percent across its passenger vehicles portfolio, including EVs.

JSW MG Motor India has also announced a price hike of up to 3 percent across its entire product portfolio effective January 2025.  Satinder Bajwa Singh, Chief Commercial Officer, JSW MG Motor India stated, “While we try to minimise its impact on our customers, a marginal price increase shields us from inflationary challenges.”

On 9th December, Kia India announced that it will increase prices of its entire model range by 2 percent from January.  Hardeep Singh Brar, Sr. Vice President, – Sales and Marketing, Kia India said, “Due to the persistent rise in commodity prices, unfavourable exchange rates, and increased input costs, a necessary price adjustment has become unavoidable. Despite these challenges, Kia is absorbing a significant portion of the cost increase.”

In the luxury car market, BMW India and Audi India announced that they would increase prices by up to 3 percent across the model range due to rising input and transportation costs. Both the German luxury carmakers noted that the price hike will be effective from January 01, 2025.

According to Balbir Singh Dhillon, Head of Audi India, “This correction is essential for Audi India and our dealer partners to ensure sustainable growth.”

According to Puneet Gupta, Director at S&P Global Mobility, rising costs, growing business uncertainties, and investments spanning multiple fuel types and technologies are driving car manufacturers to hike prices. “Additionally, shortening model lifecycles and stricter emission and safety standards necessitate heightened cost allocation,” noted Gupta.

According to the Federation of Automobile Dealers Associations (FADA), price adjustments happen every year and the impact on sales in January will be temporary.

“While OEMs understandably raise their vehicles’ prices due to rising input and labour costs, vehicles are not selling as fast as everyone wants them to sell. There is a pile up of stock never seen before, resulting in higher discounts. Given all these situations, probably the manufacturers can think twice about raising prices, or the quantum of hike could probably be a bit tempered given the current market situation,” said C.S. Vigneshwar, President, FADA.

An auto industry insider claimed that the revision in prices is a marketing gimmick to draw in customers who have been deferring their purchase plans to January.

“Commodity prices have softened over the last few quarters and there are no supply constraints of any component. While a minor price revision for bestselling models makes sense, nothing is required for products which are readily available. The proposed price increase will be offset by the hefty discount offers available on many models,” said an industry source requesting anonymity.