High prices of precious metals such as silver and platinum along with broader commodity inflation may force two-wheelers and commercial vehicles manufacturers to go for a price hike during the fourth quarter. These companies are likely to mix it up with volume growth and cost-cutting measures as they brace for another quarter of margin pressure.
India’s auto industry delivered its best-ever third quarter in FY26, with passenger vehicle sales rising 20.6% to 1.28 million units, commercial vehicles 21.5% to 0.29 million units and two-wheeler by 17% to a record 5.70 million units, aided by festive demand and a boost from GST rate rationalisation across categories.
However, the strong volume performance was partially offset by rising raw material costs driven by commodity inflation.
TVS Motor Director & CEO K N Radhakrishnan said the commodity price hike was driven by aluminium, copper, zinc and precious metals such as platinum, palladium and rhodium.
“We are closely monitoring the situation,” he said, adding that the company is relying on scale, cost reduction, product mix and selective price increases to offset the pressure. The company reported a 31% year-on-year increase in raw material costs to Rs 8,291 crore in third quarter.
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“You can look at small price increases but it can’t be fully passed on,” he said during the earnings call. The company has already implemented a 0.2–0.3% price hike across categories in the third quarter.
Crisil Ratings Director Poonam Upadhyay said prices of precious metals such as platinum, palladium and rhodium have risen 35–65% year-on-year and are likely to remain volatile depending on mining supply and recycling from end-of-life vehicles and catalytic converters.
She added that base metals such as aluminium, copper and steel remain stable to firm, supported by steady demand and disciplined global supply additions, subject to industrial demand trends. Prices of these metals are up about 7%, 12% and 6% year-on-year, respectively
Bajaj Auto, the country’s second largest two-wheeler maker, expects commodity inflation to shave off 50–60 basis points from margins.
“We have seen further cost inflation. Noble metals, including rhodium, platinum and palladium, are heating up. Aluminium and copper remain on an upward trend, while steel is broadly stable,” CFO Dinesh Thapar said during the earnings call
The Pune-based automaker is also planning some price hikes in the current quarter. “Given the strong festive volumes, we chose to defer pricing actions to the start of this (Q4) quarter,” he said.
According to Upadhyay, raw materials typically account for 65–75% of bill of materials (BoM) of original equipment manufacturers (OEMs) but it may rise to 75–80% for commercial vehicles due to higher metal intensity and about 70–75% for two-wheelers. Passenger vehicles have a lower share of 60–70% BoM due to higher electronics and software content.
Even electric scooter makers are not insulated from the commodity price inflation despite their low reliance on metals. Ather Energy’s raw material costs surged 53% in Q3FY26.
“We are seeing certain commodities on specific chemistries also going up. The battery side is more manageable, it is the vehicle side that seems a little bonkers right now,” Ather Co-founder and CEO Tarun Mehta said.
Silver’s Volatility
Precious metals such as silver account for only 1–2% of BoM but remain highly volatile due to import dependence. Silver prices have rallied over 160% in the past year to about Rs 2,80,000 per kg. About 25–50 grams of silver is used on average in an EV, while it also enhances chemical reactions in catalytic converters, Upadhyay said. Silver’s price rally is further expected go up due to rising use in EVs, solar panels, and electronics.
“We are facing a bit of a challenge as far as commodity costs are concerned,” Shenu Agarwal, MD & CEO, Ashok Leyland said during the third quarter earnings press briefing. He said while the price of steel is stable right now, some of the precious metals have seen quite a bit of a jump in the last 2-3 months. “I think that they should subside within the next three to four months, ” Agarwal said. The commercial vehicle maker reported a 19% rise in raw material costs, primarily due to higher precious metal prices.