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Cars, Bikes & Commercial Vehicles To Cost More In 2021
Popular passenger car models may see 3-6 percent price increase; Cars above Rs 10-12 Lakh may witness a minimum 7 percent price increase, according to market buzz. Most automakers to reveal the exact price increase on each model in the first week of January. Skyrocketing steel prices amongst the reason for the price hike
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Blaming it on the rise in input cost and the increase in the cost of commodities, many leading automotive manufacturers have announced that starting January 2021 the price of cars, two-wheelers and in some instances, Commercial Vehicles will increase. Typically, the price correction happens every year in January and this year may not be an exception. What is evident is that the announcement towards an increase in prices has virtually be made by all leading auto manufacturers - Maruti, Hyundai, Honda, Mahindra, Renault, Isuzu, and others including Hero MotoCorp and Tata Motors (announced increasing the price of commercial vehicles so far). The price increase is expected across the portfolio of medium and heavy commercial vehicles (M&HCV), light commercial vehicles (LCV), small commercial vehicles (SCV), and buses.
Hero MotoCorp has already announced a price increase of Rs 1,500 on all models beginning January. Bajaj Auto too announced a few days ago its decision to increase the prices of its entire Pulsar range starting from Pulsar 125 Neon to Pulsar RS 200 in India. The quantum of price hike is between Rs 999 and Rs 1,498, depending on the model. All four variants of the Pulsar 125 Neon will be expensive by Rs 999 while the three variants of Bajaj Pulsar 150 will be increased by Rs 1,498.
Rising Steel Prices
Amongst others, steel is an important input for the automakers. In the last 6-months, the price of steel has seen a massive increase of 55 percent. This is one of the several reasons why the automakers have decided to increase the prices of passenger and commercial vehicles.
Concerned over the steep hikes at the prices of steel and cement, both inputs for construction, the minister for Ministry of micro, small and medium enterprises (MSME) and highways Nitin Gadkari has written a letter to Prime Minister Narendra Modi seeking his intervention to arrest the trend. “Steel companies have raised the rates by 55% in the last six months. I have written to the Prime Minister and have suggested that the issue should be discussed at the highest level. Some decision has to be taken. This (the price hike) is not good. (It has to be known) if the hike is commensurate with the increased cost of labour, power and raw materials. Lowering the productivity and increasing the rate is not a good strategy,” Gadkari had recently said at an ASSOCHAM event.
Car Makers to Hike Prices
Maruti Suzuki announced that the price will be increased across all its offerings. However, it is not disclosed that by how much cars will be costlier. Announcing the hike, India’s largest automaker said, "Over the past year, the cost of the company's vehicles has been impacted adversely due to an increase in various input costs. Hence, it has become imperative for the company to pass on some impact of the above additional cost to customers through a price increase in January 2021."
On the same lines, Hyundai Motors also announced the hike from January next year. However, the increased percentage is still not disclosed by the company. Stating the reason, South Korea based manufacturer said, the prices are being increased because of the rise in input and material costs. Hyundai is the second-largest carmaker in India and has 10 cars in its line-up. It is expected to increase the prices of its popular selling brands including i10, i20, Creta, Verna, Venue, and CRV in January.
Moving ahead, the next price hike was announced by Mahindra and Mahindra. The Indian OEM has announced that the price of both the passenger vehicles and the commercial vehicle will go up from the next year. The company stated the “This has been necessitated due to the increase in commodity prices. Details of the price increase across different models will be communicated in due course”.
Next in the queue is Renault Motors. The company has announced a price hike of up to Rs 28000 across its offerings from the next year. The carmaker cited rising input and other associated costs as a reason for the price increase. However, the exact percentage of hike per car is still not disclosed by the company. While prices are set to go up from the next year, Renault is offering discounts of up to Rs 70,000 in the current month.
Moreover, MG Motors, which is aiming to launch Hector Plus seven-seater variant next year, has also announced the price hike from January 2020. According to Carmaker, “undertake a price revision across its product range in view of the miscellaneous cost increase. The price hike will range up to 3 per cent, depending on the model and will be applicable from January 1, 2021”.
Interestingly, Tata Motors still not announced any price hike in the passenger segment till now, at least not at the time of filing this story. However, the company has stated that its commercial range will see the price hike of commercial vehicles across categories starting January 2021. Though, the Mumbai based manufacturer hasn't disclosed the exact percentage of the hike. The company said "The steady rise in material and other input costs, the impact of forex and transition to BS6 norms, have cumulatively escalated the cost of manufacturing vehicles. The company had thus far been absorbing the addition in costs but with their steady rise in line with the market trend, it has become imperative to pass at least some portion of the cost increase to customers via appropriate price revisions"
Lastly, Isuzu Motors has announced a price increase for its range of commercial vehicles sold in the country. This will include both the D-Max and the D-Max S-Cab models that were recently introduced by the manufacturer. The company said it will increase the prices of these models by around Rs 10,000. For instance, the D-Max cab is available at (Price – 7.72 lakhs Ex-showroom), From next year, this might be changed to Rs 7.82 lakhs. The new pricing for all models will be effective across the country from January 1, 2021.