Your next car can cost more, because price pressure the industry of India grabs

The raw material prices climb again after a softer second half of FY25, so that Indian car companies make small price increases to dampen the impact. Analysts have warned about rising raw material costs, in particular steel, the last quarter and in the current one. While car manufacturers try to absorb part of the pressure due to cost reduction and changes in the product mix, market leaders in the industry say that the upward price trend can become a challenge in the coming months.

Speaking during the profit call from Mahindra & Mahindra (M&M) first quarter, Rajesh Jejurikar, executive director and CEO of the company’s car and agricultural sector, said: “Steel has risen 6% in the past quarter and so far we have taken some price increases to neutralize it.” Analysts noted that precious metals have also become more expensive, partly powered by American before purchasing activity.

Rohan Kanwar Gupta, Vice-President and Sector Head for Company Assessments at ICRA, said: “There has been some increase in the selected raw material prices in the last two quarters, after prices in H2 Cy2024 prices. Some paving in the raw material prices is expected to be a mad 3 fy26, which could be fty.”

For now, the financial hit is not significant, with the most important financial officials estimating the impact at around 0.5%. Bharat Madan, CFO of Escorts Kubota, said: “The rise in resources is serious for PV companies, but this quarter there was also some pressure on us and Q2 can see an inflatory impact of about half a percent.”

Despite the costs rise, analysts believe that the effect on the profit of car manufacturers is limited. Gupta said: “Despite the rise in prices, the gross margins for OEMs in the automotive segments remain at a fixed level, to a extent helped by price increases taken by OEMs at the start of the calendar/fiscal year.”

While raw material costs are rising, the automotive sector is also confronted with a delay in demand in one of the strongest segments. Monthly SUV sales in India fell for the first time in more than five years in June, because the sector was dismissed, geopolitical tensions and wider macro -economic challenges on the copper sentiment. SUVs have been the most important engine of the sales growth of the passenger vehicles for almost a decade. Industrial data that is accessible by ET shows that the SUV sales fell by 2.1% from last year to around 175,000 units in June. The sales data of passenger vehicles for July must still be drawn up. Experts said that this is the first monthly fall in SUV sales after years of uninterrupted growth, which signals the buyer’s fatigue. SUVs are now good for around 55% of all passenger cars that are sold in their own country, with regard to micro, compact, medium and large models to meet a wide customer base.

SUV sales had grown in strong double digits between FY20 and FY25. During the first quarter of the current tax year, however, sales rose only 5.6% to 572,000 units, at an increase of 11.3% in FY25.

(WTH toi inputs)