Maruti Suzuki India, the country’s largest car maker, is set to substantially hike prices across its models in the July-September quarter because of a rise in prices of various essential commodities, including steel. The hike in prices would be the third increase for the car maker in 2021.

“Steel prices have gone up by 80 per cent compared with May last year and prices of precious metals such as rhodium and palladium have increased by 250 per cent. So, the price increase could be substantial compared with the January and April price hikes,” MSI executive director (sales and marketing) Shashank Srivastava told The Telegraph.

The data showed that the average price hike across models in January was 1 per cent and in April it was 1.6 per cent.

“In April, we passed on a part of the increased input costs to consumers thinking that the prices of these essential commodities will come down eventually. But that has not happened and as a last resort we are doing it to safeguard the company’s financial health,” he said.

He noted that the price of steel has gone up from Rs 38 per kg to Rs 68 per kg, while that of rhodium has gone up from Rs 19,000 per gram to about Rs 66,000 per gram, thus impacting the production cost.

Rhodium and palladium are used in the catalysers and their demand has gone up manifold because of the introduction of stricter emission norms across the world. The requirement of these precious metals in BS-VI models is substantially more, leading to a spike in the cost of the vehicle.

“There are no signs that the prices of steel and precious metals would come down, in fact it is increasing. We are not in a position to absorb the impact and, therefore, would pass on some of it to the consumers in the July-September quarter,” Srivastava noted.

Srivastava said “the company is still working out the price hike issue – whether it should be across all models or only to some models. The internal debate is on the input cost impact on the topline and the bottomline and how to work out an optimal solution to it”.

Earlier in a regulatory filing, MSI stated: “Over the past year, the cost of the company’s vehicles continue to be adversely impacted by the increase in various input costs. Hence, it has become imperative to pass on some of the additional costs to customers.”