STIMULUS IMPACT: Maruti Suzuki to go for second price hike in four months

Maruti Suzuki has said that it will go for a round of price increases next month (April), its second in four months.

The company had increased prices of its cars and utility vehicles on Jan 18 this year, citing rising commodity costs.

“Over the past year the cost of company’s vehicles has been impacted adversely due to increase in various input costs. Hence, it has become imperative for the company to pass on some impact of the above additional cost to customers through a price increase in April, 2021.

“This price increase shall vary for different models,” the company said.

In January, the biggest hikes in prices were seen in in-demand models such as Swift, Wagon-R, Celerio and Ertiga, while models such as Dzire, S-Presso and Vitara Brezza saw only modest or no increases.

Last time, prices were increased as part of an industry-wise revision that saw nearly all automakers in India raise their prices.

This time, Maruti Suzuki has been one of the earliest to indicate an increase in prices from next month. However, chances are that other automakers will join in and announce similar moves soon, as happened last time.


The increase in auto prices are an indirect result of the policies of US Federal Reserve and the US government.

The US government has announced massive currency-printing programs of trillions of dollars over the last six months, leading to a flood of dollars into the global ecosystem.

This has led to a gradual depreciation in the value of the dollar.

As nearly all commodities — including the steel, aluminum and nickel used in automobiles — are priced in US dollars, a decline in the value of the dollar leads to an increase in the price of these commodities.

Even though India does not depend on international supplies of these products for its domestic production, the prices of these commodities in India are influenced by their international prices, partly because local producers can get a higher price by exporting these commodities.

There have been requests by consuming industries — such as real estate and construction majors and auto makers — for the government to step in and moderate the increase in raw material prices, warning that increasing end-product prices will sharply affect demand, as well as economic growth.

Most have suggested export curbs as a means of modulating commodity prices in the local market.

Apart from Tata Motors, which gets a steady supply of steel from its group firms, most auto makers have to buy steel from the market.