Maruti Suzuki hikes prices by up to 4.7% on select models

FE had first reported on January 14 that manufacturers including Maruti Suzuki, Hyundai Motor India, Mahindra & Mahindra and Tata Motors, did not raise vehicle prices beginning this month, despite making an announcement in December.

By:Published: January 28, 2020 10:48:59 AM

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Maruti Suzuki has increased prices on select cars by up to 4.7% of the ex-showroom price (Delhi) with immediate effect, citing a rise in input costs. The move comes more than a month after the country’s largest carmaker had announced an increase in price from January. While the company did not specify a model-wise price increase, the price of entry-level model Alto range has likely gone up in the range of `6,000-9,000, S-Presso between `1,500 to 8,000 and WagonR between `1,500 and `4,000. Price of Ertiga is likely to rise between `4,000-10,000, Baleno by `3,000 to 8,000 and XL6 by up to `5,000.

Manufacturers increase prices in January — in the range of 2-5% — to offset any increase in manufacturing cost during the year. The revised prices are generally rolled out within the first week of January but the company did not raise prices then. FE had first reported on January 14 that manufacturers including Maruti Suzuki, Hyundai Motor India, Mahindra & Mahindra and Tata Motors, did not raise vehicle prices beginning this month, despite making an announcement in December.

Experts said this may be because poor consumer sentiment continues to impact demand and any price hike may further dent sales. In a stock exchange filing on December 3, Maruti said over the past year the cost of vehicles has been impacted adversely due to increase in various input costs. “Hence, it has become imperative to pass on some impact to the customers through a price increase across various models,” Maruti had said. Hyundai Motor India and Mahindra & Mahindra have still not increased prices, while Tata Motors is believed to have increased prices marginally on select models.

Analysts and experts said an early price hike announcement has for long been a marketing tool for many manufacturers to liquidate the year-end stock as consumers usually prefer buying units with the new year registration.Over the last one year, car prices have jumped around 15% on account of rise in insurance premium and safety norms, resulting in a two-decade low sales virtually every month in 2019. During the April-December 2019 period, volumes declined over 16% y-o-y. Poor sales and excess inventory forced manufacturers to offer record high discounts, a move which improved sales slightly during the festive period of 2019, but fell thereafter.

Prices are expected to increase as the manufacturers start rolling out models with a BS-VI engine, when the industry switches to the new emission standards from April 1, 2020. Maruti has already converted and launched 11 models with BS-VI engines, which together comprise 85% of its total volumes. Others are yet to launch the entire portfolio with the upgraded engine. Nikunj Sanghi, International Director at FADA, who is also a dealer for Mahindra, earlier said mostly manufacturers don’t raise prices due to competitive reasons. “Every manufacturer wants to follow when it comes to price hike. If the market leaders don’t do it, others also wait thinking it may impact their sales,” Sanghi said

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