Tata Motors has already increased the prices of its cars, Mercedes-Benz will do so next month, and more automakers are expected to follow suit
With FY2021-2022 coming to a close, we expect automobile manufacturers in India to announce price hikes on their vehicles. Tata Motors has already announced a price hike on its passenger vehicles, just a few days ago, of up to Rs. 25,000 on select models. Mercedes-Benz is all set to hike the prices of its cars next month, by around Rs. 50,000 to Rs. 5 lakh, depending on the model.
Ola Electric has also announced that it will increase the prices of its scooter range in the next purchase window. People buying the scooter in the current (ongoing) window will be exempt from this hike. We expect other carmakers and two-wheeler manufacturers to also increase the prices of their vehicles very soon, likely in April 2022, definitely within the next few months.
With the continuously rising prices of raw materials (rubber, steel, other metals), an increase in automobile prices is to be expected. Also, the semiconductor shortage is still ongoing, placing a huge burden on manufacturers. The Russia-Ukraine war has further caused major problems for the global semiconductor chip supply.
It should be noted that most automakers had announced price hikes in January 2022. Another price hike in the next quarter might turn away many potential buyers, resulting in another sales slump. However, it should be remembered that in 2021, we saw multiple price hikes throughout the year by almost every automaker.
Due to the rising prices of new vehicles, the demand for used vehicles has seen a huge rise. The used car market grew by a significant margin last year, and it is expected to grow even more going forward. That said, the demand for new vehicles hasn’t faltered, with newly-launched models piquing the most consumer interest, generally speaking.
Also, electric mobility is expected to see huge growth in the Indian automobile market soon. However, EVs utilise a lot more semiconductor chips than ICE cars, and due to the shortage, we don’t expect electric vehicles to become mainstream anytime soon, despite the steadily improving EV charging infrastructure across the country.