Swaraj Baggonkar Moneycontrol News
The country’s largest commercial vehicle manufacturer Tata Motors will increase prices of its trucks and buses by 1-1.5 percent next month due to a consistent rise in raw material cost.
A top company official confirmed to Moneycontrol that a price hike is on cards. The Mumbai-based company has already increased prices of its products thrice this financial year.
The hike in January will come on the back of subdued demand conditions and in the run up to the move to Bharat Stage VI emissions norms next year.
“We have taken price hike in May and then again in July and once again in October. The commodity price hike is unprecedented. While we have a very aggressive cost reduction practice we had to pass on some of the hike to the customer. In January we will have another price increase. It will depend from segment to segment but broadly speaking it should be in the range of 1-1.5 percent," said Girish Wagh, President (Commercial Vehicle B usiness Unit), Tata Motors.
The commercial vehicle industry is following in the footsteps of the car market where several companies including Tata Motors, Honda, and Toyota have talked about a price hike of 2-4 percent in January.
The hike should benefit Tata Motors' overall margins as more than 70 percent of the company's standalone revenue is generated by the CV segment.
Interestingly, the challenge of high discounting is as prevalent in the truck market as it is in the passenger car market. November, for instance, was a challenging month for the CV industry due to subdued consumer sentiment amid tightening liquidity and higher interest rates.
“We have walked away from a few orders which only looked at the initial buying cost rather than the total cost of ownership. Discounts have been an issue and continue to be," Wagh said.
Tata Motors' rivals such as Ashok Leyland, VE Commercial Vehicles and Mahindra & Mahindra have not spoken about a price hike yet, though they are expected to follow suit.
Tata Motors' domestic CV sales declined 5 percent last month to 33,488 units, compared to 35,307 units sold in the same month last year.
The company's medium and heavy commercial vehicle segment reported an on-year decline of 24 percent in sales to 9,793 units in November.
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