Indian Auto Makers to Hike Car Prices in April 2021
Likely increase in prices of steel to record levels in April 2021 will impact automobile manufacturers in the coming months as most of them will have to
Likely increase in prices of steel to record levels in April 2021 will impact automobile manufacturers in the coming months as most of them will have to increase prices of their products to protect their operating margins, but most manufacturers will not be able to pass on entire rise in input cost as the economy is still not out of the Covid-19 induced slowdown. According to Care Rating, most auto manufacturers are expected to take a second price hike in the range of 1-3% in April 2021 after already having taken 3-4% hike in January 2021. Leaders in the passenger vehicle & two-wheeler segments Maruti Suzuki & Hero MotoCorp have already announced price increases wef 1 April 2021. Toyota Kirloskar Motors Limited, Renault India and Nissan Motors etc have likewise announced price hikes effective from April 1 and others will follow suit
Maruti Suzuki announced “Over the past year the cost of company's vehicles has been impacted adversely due to increase in various input costs. Hence, it has become imperative for the company to pass on some impact of the above additional cost to customers through a price increase in April, 2021. This price increase shall vary for different models.”
World’s largest two wheeler maker Hero MotoCorp has announced increase in the ex-showroom prices of its motorcycles and scooters from April 1, 2021. It said “The price increase across its range of two-wheelers will be up to INR 2500. The exact amount will vary according to the model and the specific market. The price hike is to partially offset the impact of increased commodity costs.”
According to JM Financial Institutional Securities “After recording a sequential rise of 19% in the December quarter, domestic steel prices have jumped by another 19% QoQ in the on-going quarter. Aluminium prices have increased by 11% QoQ in Q3FY21 and further 7% QoQ in Q4.”
Care Ratings said “After a slight dip in February 2021 domestic steel prices recovered in March 2021 and are expected to remain elevated over the coming months on the back of higher international steel and iron ore prices. It is anticipated that HRC prices are expected to go up by at least INR 3,500-4,000 per tonne in April 2021. INR 4,000 per tonne hike will take domestic HRC prices to INR 59,000-60,000 per tonne.”
Following the increases in January there was no impact on retail and wholesale demand. Passenger vehicle (cars+SUV+vans) February wholesales grew by nearly 18% while two-wheeler wholesales during the same month went up by 10%.
Ratings agency ICRA said India's passenger vehicle industry, after a 2-4% de-growth in 2020-21, is expected to post a growth of 22-25% in 2021-22. As per an ICRA research, the growth will be achieved on a lower base of Q1FY21. Besides, expected pick up in economic activity, improved consumer sentiments, resilient rural income sentiments, healthy crop cycles and several government initiatives will propel growth. Further, the agency noted that shift towards personal mobility from public transport in the present pandemic laden scenario will also help the sector.