Country’s largest carmaker Maruti Suzuki India (MSI) on Thursday said it will increase the prices of vehicles from January next year to offset the impact of the increase in cost.
The price hike will vary from model to model, the auto major said without sharing details.
“In the last one year, the cost of vehicles of the company has been adversely affected due to an increase in various input costs.
Therefore, it has become imperative for the company to pass on some of the impact of the above additional costs to the customers by way of price escalation,” MSI said in a regulatory filing.
The price hike is planned for January 2022, and the hike will vary for different models.
The company sells a range of models from the hatchback Alto to the SUV S-Cross, with prices starting from Rs 3.15 lakh to Rs 12.56 lakh (ex-showroom, Delhi) respectively.
The auto major has already hiked the prices of vehicles three times this year – 1.4 per cent in January, 1.6 per cent in April and 1.9 per cent in September, taking the total volume to 4.9 per cent.
In an interaction with PTI, MSI Senior Executive Director (Marketing and Sales) Shashank Srivastava said that in the past the demand for essential commodities like steel, aluminum, copper, plastics and precious metals forced the company to hike prices over the last one year.
“We are seeing a really big increase in commodity prices and hence the material cost of the company, which is around 75-80 per cent of the cost structure of auto OEMs, has been impacted,” he said.
Srivastava said the company has been under pressure since last year, but avoided major price hikes as it would have affected the demand outlook in the market.
“As we took a major hit in profitability, and with commodity prices remaining high, we were left with no other option but to take corrective action. This year we have increased prices overall by 4.9 per cent, which is actually less than the impact we are seeing due to higher commodity prices.
Srivastava said the price hike is the last resort for the company as it does not like to burden the consumers.
“We were thinking that commodity prices would come down, but it did not happen,” he said. On our part, we lowered our costs, increased efficiency, but that was not enough, and eventually, we had to raise prices,” he said.
Srivastava further elaborated that in the last April-May, steel prices were around Rs 38 per kg, which has reached Rs 77 per kg this year.
“These are unprecedentedly high… Steel prices are expected to remain high… Similarly, the cost of plastics will remain high.
“For the third time, aluminum production in China has decreased, resulting in cost increases from about $1,700-1,800 per tonne to $2,700-2,800 per tonne,” he said.
Similarly, there has been a significant increase in the prices of copper and precious metals, Srivastava said.
“It is difficult to maintain this level of cost structure, and therefore, we have decided that we will increase prices in January,” he said.
Srivastava said the company is currently working on the quantum of hike, which will vary from model to model.
“Given the sharp rise in the prices of the commodities, the price hike will be substantial,” he said.
Maruti Suzuki announces price hike once again!!!
• To be put in effect from January next year
• Increased input costs, additional production costs are the reasons behind the hike
• Price increase will vary for different models pic.twitter.com/uXADwi9f76— Times Drive (@TNTimesDrive) December 2, 2021