Auto major Tata Motors has decided to increase the prices of its commercial vehicles by up to 2.5% from July 1 amid rising input costs. Tata Motors says it absorbs a major portion of input costs at many levels of manufacturing but the steep rise in input costs has forced it to pass on the extra cost to customers. This is the third hike by Tata Motors this year after it raised the prices of its passenger vehicles by 0.9% in January and the commercial range by 2.5% in March.
"India’s largest commercial vehicle manufacturer has announced an impending price hike of its commercial vehicle range. An increase in price in the range of 1.5-2.5%, will come into effect from 1st July 2022 across the range, depending upon individual model and variant," Tata Motor says in a statement.
The company adds that it "takes extensive measures to absorb a significant portion of the increased input costs, at various levels of manufacturing, the steep rise in overall input costs makes it imperative to pass on a residual proportion via a minimised price hike".
In its annual report for FY22 released this month, Tata Motors had expressed concerns that supply disruptions and dealership closures due to Covid-19 lockdowns in China could impact its financial performance in the ongoing fiscal. It said risk factors stemming from the Russia-Ukraine war and semiconductor shortage could hinder supply chains and affect business.
The Tata Motor stock closed 0.77% or 3.20 points to 417.7 on the National Stock Exchange today. The stock has been down 5.58% in the past one month; 12.25% in the past six months; and 16.06% in the year-to-date period.
Tata Motors had posted a net loss of ₹1,033 crore in the January-March period compared with a ₹7,605 crore loss during the same period last year. It was able to narrow its losses this time from ₹1,516.14 crore during Q4 FY21. Tata Motors' revenue fell 11% to ₹78,439 crore during Q4 FY22 from ₹88,627.90 crore during Q4 FY21.
The auto price hikes can be seen in the larger context of the industry battling to ensure profitability amid the rising commodity prices. On May 23, India's biggest two-wheeler major Hero MotoCorp announced to hike prices of motorcycles and scooters by Rs 3,000. It was the second hike by Hero in around two months. Before this, Hero MotoCorp had hiked the motorcycles and scooters prices by up to ₹2,000 from April 5. Hero MotoCorp also said it would revise the prices from July 1, 2022.
The auto sector, which is one of the worst-hit industries due to Covid-19, is grappling with various issues like chip shortage, supply chain constraints and high commodity prices. Companies like Mahindra & Mahindra, Maruti Suzuki, Hyundai, Mercedes-Benz and others have also resorted to price hikes to offset the rising input costs.
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