Cars set to get expensive from January as OEMs announce price hikes

Prices of various car models -- ranging from entry-level hatchbacks to high-end luxury offerings -- are set to rise as automakers have announced price hikes with effect from January.

Carmakers cite an increase in input costs and operational expenses as the main reason to implement price increases from the next month.

Industry experts, however, note that the exercise is also undertaken by automakers every year in December to shore up sales volume in the last month of the year, as customers postpone buyouts to later months to get the new year manufactured units.

"We have seen a few cycles of price increase in India. It happens at the beginning of the calendar year and financial year, but a few OEMs pick the timing based on their planned launches as well," Deloitte India Partner Rajat Mahajan said.

While there could be multiple factors for the price increase, the key one is due to a decline in profitability of a few large auto OEMs in the second quarter, he added.

"Due to the festive season, the price revisions were not done. Hence, this is expected at the beginning of Q4.

"Rising input costs of a few materials, shifting consumer preferences on advanced features but a low willingness to pay, clubbed with the pressure of supporting dealers to offset high inventory carrying costs despite high festive discounts are putting a burden on profitability," Mahajan stated.

Icra vice-president and sector head, Corporate Ratings, Rohan Kanwar Gupta, said automakers generally take a price increase at the start of the calendar year to help offset factors like the increase in operational costs on account of inflationary pressures and commodity prices, etc.

"The recent price hikes announced by various carmakers are for the same reason. It must be noted that there are already healthy discounts on offer across a variety of models in the passenger vehicle industry, with the industry focused on bringing down inventory levels," he added.

The country's largest carmaker Maruti Suzuki India plans to hike vehicle prices by up to 4 per cent from January.

The company, which sells models ranging from entry-level Alto K10 to multi-utility vehicle Invicto, said it is taking a price hike in light of rising input costs and operational expenses.

"While the company continuously strives to optimise costs and minimise the impact on its customers, some portion of the increased cost may need to be passed on to the market," it stated.

Rival Hyundai Motor India is also looking to increase the prices of its model range by up to Rs 25,000 from January 1, 2025.

The price increase has been necessitated due to an increase in input costs, adverse exchange rate and increase in logistics costs, the maker of Verna and Creta said.

Mahindra & Mahindra will hike prices of its SUVs and commercial vehicles by up to 3 per cent from January.

The adjustment is in response to the rising costs due to inflation and increased commodity prices, Mahindra & Mahindra said.

Similarly, JSW MG Motor India said it will increase prices of its entire model range by up to 3 per cent from next month.

The price increase is a result of continuously rising input costs and other external factors, the automaker stated.

Honda Cars India is also considering a price increase but is yet to decide on the quantum.

Luxury car market leader Mercedes-Benz India plans to increase prices by up to 3 per cent from January.

Increased commodity prices and higher logistics expenses driven by persistent inflationary pressures are putting a significant strain on the company's overall operational costs, Mercedes-Benz India stated.

Prices of Mercedes-Benz cars will be revised in the range of Rs 2 lakh for the GLC to Rs 9 lakh for the top-end Mercedes-Maybach S 680 luxury limousine.

Audi India will increase prices by up to 3 per cent across the model range due to an increase in input and transportation costs.

"This correction is essential for Audi India and our dealer partners to ensure sustainable growth," Audi India Head Balbir Singh Dhillon said.

Similarly, BMW India is looking to increase prices of its model range by up to 3 per cent from January next year.