The country's largest carmaker Maruti Suzuki India (MSI) on Thursday said it will increase vehicle prices from January next year to offset the impact of the rise in input costs. The price increase would vary from model to model, the auto major said, without sharing the details.
"Over the past year, the cost of company's vehicles continue to be adversely impacted due to increase in various input costs. Therefore, it has become imperative for the company to pass on some impact of the above additional costs to customers through a price hike," MSI said in a regulatory filing.
The price rise has been planned for January 2022, and the increase shall vary for different models, it added. The company sells a range of models, starting from hatchback Alto to SUV S-Cross, with prices starting from Rs 3.15 lakh to Rs 12.56 lakh, respectively (ex-showroom, Delhi).
The auto major has already hiked the vehicle prices three times this year -- by 1.4 per cent in January, 1.6 per cent in April and 1.9 per cent in September, taking the total quantum to 4.9 per cent.
In an interaction with PTI, MSI Senior Executive Director (Marketing and Sales) Shashank Srivastava said the company has been forced to take price hikes, with the increase in prices of essential commodities like steel, aluminium, copper, plastic and precious metals over the last one year.
"We are witnessing a really big increase in the commodity prices and therefore the company's material cost, which accounts for around 75-80 per cent of the auto OEMs cost structure, has been impacted," he noted.
Srivastava said the company has been under pressure since last year but avoided taking big price hikes as it would have impacted the demand scenario in the market.
"As we took a big hit in profitability, and with commodity prices remaining high, we were left with no other choice but to take corrective actions. This year we have taken a price increase of 4.9 per cent in total, which is actually lower than the impact we are witnessing on account of high commodity prices," he noted.
For the company, a price increase is the last resort, as it does not like to burden the consumers, Srivastava said.
"We were thinking that the prices of commodities would soften, but that did not happen. On our end, we reduced our costs, increased efficiencies, but that was not enough, and eventually, we had to take price hikes," he added.
Elaborating further, Srivastava said that steel prices last April-May stood at around Rs 38 per kg, which went up to Rs 77 per kg this year.
"These are unprecedented highs…steel prices are expected to remain high...similarly plastic costs will continue to remain high.
“Thirdly production of aluminium has gone down in China…as a result the cost which used to be around USD 1,700-1,800 per tonne has gone up to USD 2,700-2,800 per tonne," he added.
Similarly, prices of copper and precious metals have gone up considerably, Srivastava noted.
"It is difficult to sustain this level of cost structure, and therefore, we have decided that we will increase the prices in January," he stated.
Srivastava said that the company is currently working out the quantum of the hike, which would vary from model to model.
"Considering the huge increase in commodity prices, the price hike would be substantial," he noted.
MSI sells its product range in the country from two sales networks -- Arena and Nexa.
(With PTI inputs)
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