Maruti Suzuki to increase prices of all its models from Jan 2021 as raw material gets costlier

India's largest carmaker Maruti Suzuki India on Wednesday said that it would increase prices of its vehicles from January 2021. The price will be increased due to the impact of the increasing input cost.

The carmaker has said that the cost of the vehicles severely impacted due to various input costs and the company must pass on some impacts on the customers.

In a regulatory filing at BSE, Maruti Suzuki said. "Over the past year, the cost of the company's vehicles has been impacted adversely due to increase in various input costs. Hence, it has become imperative for the company to pass on some impact of the above additional cost to customers through a price increase in January 2021." It added, "This price increase shall vary for different models."

Raw material prices are hardening with the full impact of cumulative increases to be felt in Q3 and Q4 of this financial year. Key inputs for the auto industry, like steel, aluminium, copper and rubber, are all headed northwards. Steel is up 30 per cent in 6 months, aluminium is up 40 per cent and copper up 77 per cent since March.

The company had earlier told to Bloomberg that it is expecting that the next year will be much better than this year, i.e. 2020, as the economy will rebound and the consumers will emerge from the pandemic-induced lockdowns to buy vehicles. RC Bhargava, Chairman, Maruti Suzuki, has said to Bloomberg that the company's operations were hit when lockdowns were imposed earlier this year and Maruti gradually built up production and is now running at full capacity.

At present Maruti sells a range of vehicles from the entry-level small car like Alto with a starting price to multi-purpose vehicle XL6 prices. The company in November said that its total production has increased by 5.91 per cent to 1,59,221 units.

Maruti Suzuki had posted a 2.4 per cent decline in total domestic passenger vehicles sales at 1,35,775 units in November 2020 as against 1,39,133 in the same month last year. However, its overall sales, including exports, were at 1,53,223 units as against 1,50,630 in November 2019, a growth of 1.7 per cent.

While Maruti is the first company to announce a price hike, it is expected that other automakers will follow the same. Maruti has more than 50 per cent share of India's auto market.