Car, bike prices to remain elevated in Q3 FY24 signals Bajaj Auto ED
According to Rakesh Sharma, ED, Bajaj Auto, two-wheeler (2W) prices in India have risen by 30 per cent to 40 per cent in last three years.
Two-wheeler and passenger vehicle prices will remain high at least till December 2023. This is what industry insiders have signaled in recent past. Rakesh Sharma, ED, Bajaj Auto, in a recent conference said, “I expect commodity prices will remain flattish in December quarter of financial year 2024. Although, there again has been an uptick in metal prices, recently.” This signifies auto prices will not reduce if not will only increase at least in the near term.
According to Sharma, two-wheeler (2W) prices in India have risen by 30 per cent to 40 per cent in last three years. Maruti Suzuki’s Alto K10 price has almost doubled from pre-Coivd levels. Honda Motorcycle & Scooter India’s (HMSI) highest-selling scooter, Activa’s starting prices has also increased around 30 per cent. E2Ws have also become costlier due to FAME subsidy reduction.
Ever since, geopolitical tensions had risen due to Russia’s invasion of Ukraine, prices of raw materials (used in auto manufacture) have only gone up. In Q1 FY24, companies had reported some consolidation in commodity prices but, off-late, prices have again started to pick up.
According to markets research firm, SteelMint India, price of one tonne of hot rolled coil (HRC) steel (which is used in auto manufacture) has risen six per cent from June 2023 to September 2023. Price of one tonne of HRC has increased to Rs 58,800 in September 2023 from Rs 55,200 in June, 2023. Steel prices have continuously risen in last three months. This will be a hindrance for auto manufacturers in price reduction attempts. Plus, phase II of BS VI transition had kicked in India from start of current fiscal. Automotive companies have not yet fully passed on the price hike arising out of onboarding of vehicles with BS VI-II compliant devices.
As per what market experts have signaled, it is unlikely that vehicle prices will reduce. Whatever discount automotive companies have announced in the ongoing festive season will be withdrawn as soon as the season ends!