Car prices set to increase

Passenger vehicles (PVs) and two wheelers (2Ws) can become further costlier towards the later part of the current calendar year. This is because raw material prices used in the manufacture of automotovies especially that of steel have again begun to increase. As a result, automobile manufacturers will not be able to press brake on the ongoing price hike cycle on PVs and 2Ws.

According to markets research firm, SteelMint India, price of one tonne of hot rolled coil (HRC) is up six per cent in last three months. HRC is widely used in manufacture of automobiles. Price of one tonne of HRC has increased to Rs 58,800 from Rs 55,200 in June, 2023. Steel prices are rising for last three months.

Jindal Steel and Power (JSP), Managing Director, Bimlendra Jha, said, “Steel prices in India are registering an upward trend due to rapidly increasing rates of key input material coking coal.” According to him, India’s domestic steel industry meets 90 per cent of coking coal requirement through imports. And it has become 48 per cent costlier to procure coking coal from the international market as compared to three to four months ago.

The auto industry has not passed on impact of recent steel price hike on to the consumers. So far, the price hikes this year have been for installing BS VI phase – II devices in the vehicles. And also because of commodity price hike at global level which was due to supply chain constraints caused by COVID-19 pandemic. Albeit, commodity prices had begun to cool-off towards beginning of current calendar year. But steel prices have again begun to rise since June, 2023.

This is may dampen the demand from customers who have been postponing their plans of purchasing their cars and bikes because prices were already heated up. But it seems they are unlikely to find good price on their dream cars and bikes in near time soon.

Already, South Korea based automotive company, Kia India, has announced, that it will hike prices of Kia Seltos and Carens. Mahindra has also recently hiked prices of XUV variants, Marazzo and Scorpio N.