Indian automakers are likely to lift sales prices in the Q1 FY2022 (March-June) to offset soaring steel and other metal prices. In the past six months period, this would be the third successive upward revision. Post the easing of COVID-19-related lockdowns from June 2020 onwards, finished steel prices have cumulatively risen at an average of 45pc.
Domestic auto demand has recovered since October, when the first round of price hike was announced, followed by another price increase in January.
In Mumbai, prices of HR coil rose to Rs58,000-60,000/mt in January from Rs36,000-37,000/mt in June 2020. Price of base metals like aluminium also turned bullish in the past two quarters. The top brass of most automakers including Ashok Leyland, Mahindra, Eicher have expressed the need to raise prices again to pass-on high raw material costs.
To offset higher input costs, Hyundai Motors India raised auto prices by up to Rs45,000, followed Maruti Suzuki up Rs34,000, Renault up Rs40,000, Tata Motors up Rs26,000 and Mahindra and Mahindra by around Rs23,000-Rs42,000.
Society of Indian Automobile Manufacturers (Siam) indicated a recovery in India’s auto sector while highlighting concerns on the rising price of steel, unavailability of semiconductor and higher shipping container charges.
Although the vehicle scrappage policy is expected to encourage sales of automobiles. Beside metal prices, the shift from BS-IV to BS-VI has increased manufacturing costs and compelled automakers to increase prices despite slow demand. The increase in customs duty on auto parts/lithium-ion cell parts is also a concern and could increase the cost of manufacturing, said sources to Davis Index.