Tata Motors joins rivals, will hike PV prices from May 1 by 0.6%

Company earlier raised prices of its commercial vehicles by 5% as auto industry transitions to new emission norms

Tata Motors said on Friday it will increase the price of its passenger vehicle (PV) range by around 0.6 percent from May 1, joining industry rivals that made similar announcements early in FY24.

Tata Motors hiked PV prices by 2.8 per cent in FY23 through three announcements over the months. The company said that the "marginal" increase in prices from May 1 will depend on the variant and model.

“Tata Motors has been absorbing a significant portion of the increased costs on account of regulatory changes & rise in overall input costs and is hence compelled to pass on some proportion through this hike,” it said in a statement.

Domestic wholesale of passenger vehicles increased 26.7 per cent to more than 3.89 million units in 2022-23, according to Society of Indian Automobile Manufacturers (SIAM). In FY24, the automobile industry expects 5-7 per cent volume growth.

Tata Motors, from April 1, raised prices of its commercial vehicles (CVs) by 5 per cent ahead of India’s transition to new emission norms called BS 6 phase II. It was the company’s fourth price hike for CVs since the last financial year: the first one was announced in March and became in effective April 2022. The company raised CV prices again in July 2022 and January 2023, taking the total increase to around 12 per cent.

Automakers' cost is up with steel companies pressing them for an increase in contract prices after about three quarters. Steel accounts for about eight per cent of the raw material cost for cars and utility vehicles, seven per cent in two-wheelers and nine per cent in CVs.

Tata Steel, JSW Steel and ArcelorMittal Nippon Steel India (AM/NS India) are in talks with auto original equipment manufacturers (OEMs) for April-to-June contracts in the backdrop of firming up of steel prices.

Maruti Suzuki India (MSIL), the country’s largest passenger vehicle maker, said in March that it would hike prices from April, but did not give the extent.

Tata Motors and two-wheeler maker Hero Motocorp have said that they would raise prices by 5 per cent and 2 per cent respectively, as they grapple with increased costs to meet new emission norms.

Spot steel prices since December have increased by about 49 per cent in the US and by 22 per cent in Europe till March. The domestic market followed with a more than 12 per cent hike.

Commodity prices soared till about April last year and then tumbled. Contract prices for steel dropped by about Rs 15,500 a tonne over three quarters. Since the end of December, however, prices started moving up.

Even as prices had cooled, auto majors such as Maruti Suzuki, Tata Motors, Hero MotoCorp and Kia India continued to hike prices in the last several months to recover from the earlier spike in raw material costs and to prepare for the incoming real driving emission (RDE) norms. With the opening up of China, vehicle manufacturers are now wary about an uptrend in commodity prices.

“Commodity prices had shown some signs of softening around December-January but were still high compared to what it was two years back. The rise in vehicle prices has not been proportional to the rise in commodity prices as no manufacturer had the will to pass it on to the consumer in a Covid-19 hit demand disruption. Therefore, chances of price hikes remain, but we have to be very cautious,” said an automotive industry executive.