India's largest truckmaker, Tata Motors will increase the prices of its commercial vehicles by up to 3% from January 1, 2024. The price increase is to offset the residual impact of the past input costs, and will be applicable across the entire range of commercial vehicles, it says in a statement.
The price hike comes weeks after India's largest commercial vehicle company hiked prices of its model range in October. While commodity prices – steel and precious metal – have softened in Q2, providing a tailwind to Tata Motors' margins, the company sees some commodity headwinds especially from steel likely coming in Q3. Before October, the last price increase in CVs was undertaken in September last year.
Tata Motors' commercial vehicle market share stood at 41.7% in FY23. The CV manufacturer's market share increased marginally to 39.7% in Q2 FY24, up from 39.1% in Q1 this fiscal, on the back of heavy commercial vehicles.
In a conference call after Q2 earnings, Tata Motors group chief financial officer PB Balaji said that the company's commercial vehicle profitability is driven by a strong mix and increased realisations in terms of lower discounts as well as lower commodity prices.
"We believe that some amount of commodity headwinds in terms of moderate inflation is to be expected. Realisations will continue to be strong. The next driver would be where every one of our vertical is going towards its targeted profitability," Balaji said, adding that the company remains optimistic for next year as well as far as CV profitability is concerned.
The company has not had a smooth ride in small commercial vehicles this year. "Our intention is to correct it and keep growing. In heavy vehicles, we are consistently picking up market share. The fleet has aged quite a bit and the demand is coming back again," Balaji said, adding capacity utilisation in commercial vehicles is close to about 60%.
In October, Tata Motors received a Production Linked Incentive Scheme (PLI) certificate for ACE EV. ACE is the first four-wheeler commercial EV to receive the PLI certificate.
The truck manufacturer expects the MHCV segment to see double-digit growth in Q3. "Q4 would be flattish growth due to high base. Too early to speak about FY25 because general elections are happening next year," said Girish Wagh, president and head of Commercial Vehicle Business Unit - Tata Motors.