Tata Motors: Hiking price
Tata Motors share price slipped 3% on December 22 after it announced a price increase across its commercial vehicle range, effective January 01, 2021.
The steady rise in material and other input costs, impact of forex and transition to BS6 norms, have cumulatively escalated the cost of manufacturing vehicles.
The Tata Group company had thus far been absorbing the addition in costs but with their steady rise in line with market trend, it has become imperative to pass at least some portion of the cost increase to customers via appropriate price revisions.
The price increase is expected across the portfolio of M&HCV, I&LCV, SCV & Buses.
The actual change in price will depend on individual model, variant and fuel type.
The move comes at a time when early every automaker has announced a price hike to offset the input costs.
Indian automakers’ plans to pass on higher commodity prices to customers will dim the prospects for a demand recovery after December when the boost in some categories from pent-up demand and festive spending fades and the economic impact from the coronavirus pandemic reasserts itself.
Pent-up demand after gradual easing in the government’s lockdown measures helped monthly wholesale volume of passenger vehicles (PVs) return to growth after July. PV wholesale volumes rose by 13% year-on-year in the quarter ended September.
Festive demand helped sustain the growth after September but the pace slowed to 5% in November from 14% in October. This is even after including timing benefit from the Diwali festival falling in November instead of October. This indicates that pent-up demand is tapering off.
Passenger vehicle sales in India plunged 78.43% in the April-June period this year hit by the pandemic, declining for the ninth straight quarter and making it the longest slowdown in 20 years.
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