‘High input costs’ weigh: Maruti to lift costs for third time in 2021

In a transfer which will dampen client sentiment forward of the festive season, Maruti Suzuki India Ltd introduced that it’s going to enhance the value of its automobiles in September, following the sharp rise in enter price during the last 15 months. This would be the third value hike announcement by the market chief this calendar yr.
While the corporate had introduced a hike of 1.4 per cent in January, in April it raised the value of its automobiles by one other 1.6 per cent. While the corporate didn’t disclose the quantum of enhance in September, sources say it might be 3-4 per cent.
In its communication to the inventory exchanges, the corporate stated, “We wish to inform you that over the past year the cost of company’s vehicles continue to be adversely impacted due to increase in various input costs. Hence, it has become imperative to pass on some impact of the additional cost to the customers through a price rise. The price rise has been planned across models in September 2021.” Following the inventory trade announcement, the shares of MSIL rose on Monday and closed at Rs 6,797, a acquire of two.9 per cent.
Speaking to The Indian Express, Shashank Srivastava, senior government director, advertising and marketing and gross sales at MSIL, stated whereas enter price strain has been there for final 15 months, MSIL didn’t increase costs proportionately and tried to keep away from passing the enter price on to the patron because it hurts affordability and demand. “We tried improving our efficiency and manage it hoping that the prices would soften. But they have been hardening and we are left with no choice but to go for another hike. This time it would be a substantial hike,” he stated. Commodity costs have been rising during the last one yr and it has been placing strain on car producers. Almost all car producers have raised costs of their automobiles during the last six months on account of the rising enter price.
Srivastava stated costs of metal and copper, that are key enter metals, have almost doubled during the last 15 months and even the value of treasured metals, reminiscent of rhodium, has risen from round Rs 18,000 per gram to over Rs 64,000 per gram now. “While prices of precious metals have gone up, it is important to note the quantum of precious metal used in vehicles has gone up since BS-VI switch-over, thus it has been a double whammy,” he stated.
At a time steep rise in gasoline costs have hit the affordability of operating a car, Srivastava feels that the value hike of automobiles may also have an effect on client sentiment and revival of demand. “There has been some revival over the last couple of months but it is still far from where we were in 2017-18 and 2018-19. While there are worries over the third wave and rising cases in Kerala and parts of Karnataka, monsoon in August has also raised some concerns. The price hike will also have its impact. On the positive side though, we have been encouraged by rural demand,” he stated, including the chip scarcity has been one other space of concern.