Car buyers may have to pay extra for their new vehicle in January. At least four automakers have announced price increases in response to cost pressures and overall inflation.  

Maruti Suzuki India Limited (MSIL), the country's largest passenger manufacturer, announced on Monday that its model pricing would rise in January. Tata Motors Limited (TML), the world's largest manufacturer of electric passenger vehicles, will raise prices across its entire lineup in January, but the exact amount has yet to be disclosed. Mahindra & Mahindra will also raise the prices of its automobile products in the coming year buyers of luxury vehicles will also need to dig deeper into their finances. Audi India has announced a price rise of up to 2% across models beginning in January. When contacted, a Mercedes-Benz India spokeswoman stated that the business was considering raising prices in the new year. The price increases are being justified by the carmakers as a result of strong cost pressures caused by overall inflation and rising commodity prices.  

In a regulatory statement, MSIL said: "The company has planned to increase the prices of its cars in January 2024 on account of increased cost pressure driven by overall inflation and increased commodity prices." It went on to say that while MSIL makes "maximum efforts" to minimize costs and offset the increase, it may have to pass some of the cost on to the market. The price increase will differ between models.  Meanwhile, a TML representative told Business Standard, "We are considering a price increase in January 2024 across our passenger and electric vehicles." The hike's scope and specifics will be published in the coming weeks."  

MSIL's senior executive officer, marketing and sales, Shashank Srivastava, mentioned commodity price unpredictability. "Steel prices have been firming up since July, and there is also general inflationary pressure," he said in an interview with Business Standard. He went on to say that an estimate of the whole cost increase is made, and a decision to raise the price is made based on that. MSIL hiked prices by 0.8% in April of this year.  According to Nalinikanth Gollagunta, CEO (automotive division), Mahindra and Mahindra, "we intend to take a price increase for our automotive products effective January 2024," based on the inflation and commodity price outlook. The specifics will be revealed "closer to the time."

Ex-showroom prices for Audi automobiles in India would rise by up to 2% from January 1. "Achieving profitability through a sustainable business model remains a critical part of Audi India's strategy, and we are committed to providing the best to our customers," said Balbir Singh Dhillon, head of Audi India. We have implemented a price correction across our model range due to growing supply-chain-related input and operating costs, while retaining the brand's premium price positioning." He stated that the price increase is intended to secure long-term growth for Audi India and its dealer partners, and that the business will work to minimize the impact on customers.

Audi India increased its sales by 88% in the first nine months of this year, selling 5,530 cars. Among these, the Audi SUV lineup increased by 187% between January and September. In comparison, the luxury carmaker sold 4,187 vehicles in calendar year 2022, a 27 percent increase.

Mercedes-Benz India, too, recorded an 11% increase in January-September sales to 12,768 units in 2023. Top-end automobiles (those costing more than Rs 1.5 crore) account for one-fourth of the company's total sales in India and are expanding at a rate of 22%.

According to dealers, the overall rising momentum in retail would most certainly continue in December. "The harvest has been better than last year, and farmers in election-bound states have more money in hand as a result of higher MSPs for their crops." "Overall, we anticipate that the momentum will continue," said Manish Raj Singhania, head of the Federation of Automobile Dealers' Associations (FADA). Discounts, he says, continue on models for which dealers have inventory, but SUVs are rarely discounted. Srivastava believed that given the expected price increase in January, some customers would postpone their purchasing decisions until December.

Axis Securities analysts stated in an October research that they projected auto OEMs and ancillaries to have improved gross margins in the September quarter of FY24 as the incremental benefit of commodity prices persisted in Q2FY24. "In Q2FY24, steel HRC prices were corrected by 4 percent quarter-on-quarter (QoQ), while platinum/aluminum/copper/zinc declined by 9 percent/5 percent/1 percent/5 percent/1 percent on a QoQ basis," the study said.

"The commodity tailwind for the auto sector is likely to weaken QoQ in H2FY24, but we do not expect the high commodity inflation seen last year." Overall, the commodity complex is expected to be benign in H2FY24," the report stated.