Maruti Suzuki has confirmed the upcoming price increases from September 2021 for the entire line of cars. This will be the third price hike for the passenger car market leader, a move that could encourage other competitors to follow suit.
More about the price hike: Maruti Suzuki
While the company announced plans to raise prices in the second quarter of fiscal 2021-22 (July-September 2021) in June, it raised the price of the Swift hatchback by Rs 15,000 along with all other CNG models to Rs 10,000 on the 12th of July.
The latest regulatory filing refers to the June announcement but mentions that further price increases are planned for all models. While prices for some car models are likely to rise, the Swift and CNG lineup, including Alto, S-Presso, Ertiga, Eeco, Tour S and Tour M, can be maintained.
Why the third price hike?
Maruti Suzuki cites rising commodity prices as the main reason for some of the impact on consumers. Its profit margin (income tax) in the first quarter of fiscal 2021-22 (April-June 2021) reached the lowest level in many countries at Rs 440.8 crore, 62% less than in the fourth quarter of the fiscal year 2021-22 (January-March 2021). The company attributed the decrease in NPAT (income tax) to higher raw material prices, which was offset by various cost-cutting measures.
According to the Association of Indian Automobile Manufacturers (SIAM), raw material prices have shot up in recent months, with automotive raw materials such as HR steel up 87% in June 2021 over last year. CR steel also rose nearly 88% in the same month of this year. In addition, prices for precious metals recovered: rhodium showed a significant increase since the beginning of the year by 149% in June, Palladium (+ 33%) and Platinum (+ 29%). This is all very important in order for the vehicle’s exhaust gas after-treatment system to meet BS6 national emission standards.
Like Maruti Suzuki, Tata Motors also announced a price hike for passenger cars from August 3rd. Although the company increased its lineup by 0.8% earlier this month, this is its third price hike this year. In January, the manufacturer raised the price to 26,000 rupees.