Car prices are set to rise further, with Tata Motors Passenger Vehicles Ltd (TMPV) announcing a hike of up to Rs 25,000 across its internal combustion engine (ICE) and electric vehicle (EV) portfolio from September 1. Hyundai Motor India is also raising prices by up to 1% across its range in September, while Maruti Suzuki had announced a hike of up to Rs 30,000.
Tata Motors said the increase is aimed at partially offsetting rising input costs and sustained inflationary pressures. The extent of the hike will vary across models and variants. The company said it continues to absorb a significant portion of the cost escalation, with only part of the impact being passed on to customers.
Profit Margins Squeezed
The price revision comes against the backdrop of strong sales but mounting pressure on profitability. Tata Motors’ domestic passenger vehicle volumes rose 46% in Q1 FY27, while EV sales more than doubled. Revenue from operations stood at Rs 20,667 crore, with profit before tax at Rs 2,970 crore and profit for the period at Rs 2,556 crore.
However, EBITDA margin contracted to 7.4% amid higher raw material costs, including steel, aluminium and battery cells, foreign exchange losses and supply chain disruptions. Battery cell costs alone rose around 10% quarter-on-quarter, adding to the pressure on margins.
Broad-Based Cost Pressures
Hyundai said its price revision was driven by rising input and commodity costs, higher operational expenses and continuing geopolitical and macroeconomic uncertainties. The automaker said it had taken measures to optimise costs and absorb part of the escalation, but persistent pressures had made a price increase necessary.
Maruti Suzuki, which announced its hike in July, had similarly cited sustained increases in input costs, elevated inflation and an adverse cost environment. It said cost-reduction measures had helped contain the impact, but a portion of the increase had to be passed on to customers.
The successive announcements point to broad-based cost pressures across the passenger vehicle industry, with more automakers likely to follow with calibrated price increases. The impact on buyers, however, will vary depending on the brand, model and variant.
