Tata Motors today announced that effective 3rd August, it will increase the prices of its passenger vehicles, on an average of 0.8%, depending on the variant and model. The brand states that it will offer protection from the price increase to vehicles retailed or billed on or before 31st August 2021. The manufacturer has not specified a reason behind the hike in the announcement, however, the rise in input costs is said to be the factor behind the decision.
“We have seen a very steep increase in the prices of steel and precious metals over the last one year. The financial impact of the increase in commodity prices is in the range of 8-8.5 percent of our revenues in the past year,” Tata Motors President Passenger Vehicles Business Unit (PVBU) Shailesh Chandra told PTI last week.
He noted that the company has been able to pass on only a small part of the increase in input costs to the customers so far.
“From the company realisation perspective, we have passed on only 2.5 percent. From an ex-showroom perspective, this would be around 3 percent, so there is a big gap to the extent of increase that has happened (in the input costs) and what we have been able to pass on to the market,” Chandra said.
He noted that the company has been able to mitigate some of the impact of rising input costs by running various cost reduction initiatives as it wanted to avoid passing on a big quantum of price hikes to customers.
Prices of precious metals like rhodium and palladium have gone up significantly over the last year. Steel prices have also remained high during the period.
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