“We are going to most likely enhance costs once more in April. Up to now, we’ve used a greater mixture of merchandise in India and globally, however uncooked materials prices have gone up quicker than our capability to hike costs,” mentioned Siddhartha Lal, MD, Eicher Motors. The rise will occur in each industrial automobiles in addition to Royal Enfield bikes.
This worth markup comes at a time when the truck market is nearly hitting the expansion monitor after practically two years of low demand.
“We have now already taken a hike final October and one other in January. However there was important will increase in metal costs and specialised metals. If this continues, we may have no possibility however to extend costs. With India slated to be one of many highest development markets, we’re hopeful that the worth will increase might be absorbed by the market,” mentioned Gopal Mahadevan, CFO & director, Ashok Leyland.
For truck makers, this rise in prices hurts extra because the BS4 to BS6 shift had already concerned a pointy worth hike in a destructive demand market. “In Q3, our uncooked materials prices as a proportion has gone up. There was a rise from BS4 to BS6 and we began mountain climbing costs solely from Q3, when the market started to search for,” mentioned Mahadevan. The truck business slumped 54% within the April-December interval.
“Uncooked materials prices have been going up sharply and we’ll take a worth enhance within the first quarter of FY22,” mentioned Rajesh Jejurikar, ED (auto & farm sectors), Mahindra Group. “At the moment, the availability disruption over the semiconductors continues nevertheless it ought to normalise in June-July,” he added, referring to a mark-up throughout the Mahindra vary, together with SUVs and industrial automobiles.
Metal mills had sought one more worth hike of Rs 7,250 per tonne in January, however that demand has been softened, mentioned Vikas Bajaj, president, Affiliation of Indian Forging Business. “Discussions at the moment are on between OEMs and metal mills and a few worth enhance might be agreed on, however the issue is provides,” mentioned Bajaj. “If I order 100 tonne, I’m solely getting 20-30.”
The metal worth hike has additionally impacted the forging metal producers as a result of metal sometimes constitutes 60-65% of the ex-factory worth of forgings.
“Home metal producers have elevated costs twice in Q3 for forging high quality metal and thrice within the October-December interval for different sorts of metal, bringing the benchmark hot-rolled coil costs within the wholesale market (ex-Mumbai) to Rs 52,000 per tonne from Rs 36,500 per tonne in July — up 43%,” added Bajaj.