Tata Motors on Saturday said it would raise prices of its passenger vehicles by up to Rs 25,000 on account of rising input costs and external economic conditions.
The increase comes at a time auto sales have hit the slow lane.
Tata Motors joins the likes of Toyota and Jaguar Land Rover which have said that they would hike the prices of select models from April.
“The changing market conditions, rising input costs and various external economic factors have compelled us to consider this price increase. We are confident of maintaining our growth trajectory in the coming months on the back of our robust portfolio consisting of segment-leading products such as Tiago, Hexa, Tigor, Nexon and the Harrier,” Mayank Pareek, president, passenger vehicle business unit of Tata Motors, said.
Despite stable fuel prices, factors such as higher insurance costs, the liquidity squeeze witnessed by various non-banking finance companies (NBFCs) and a slowdown in economic growth have led to a lower offtake by customers, thus hitting sales.
The Federation of Automobile Dealers Associations (FADA) recently said sales of passenger vehicles in February declined 8.25 per cent to 2,15,276 units compared with 2,34,632 units a year ago.
According to FADA president Ashish Harsharaj Kale, January saw a spike in passenger vehicle sales because of year-end stock clearance getting extended and a few launches that generated some excitement. However, the industry is once again witnessing a downward trend as February turned out to be one of the slowest months during this financial year.
Kale pointed out that domestic auto sales were experiencing a prolonged slowdown as it had been six months of downturn with no positive triggers visible in the near term.
Recently, market leader Maruti had announced its decision to cut production by 26 per cent in March.
“The announcement (by Maruti) is a clear admission of the demand pressures that auto companies have been facing in the last few months. Since the liquidity squeeze that manifested in October last year, the demand for consumer automobiles has been under consistent pressure… There have been some serious issues on the financing of vehicles after the NBFCs faced a severe liquidity crunch post the IL&FS default,”Amarjeet Maurya, assistant vice-president at Angel Broking, said.
Starting with the huge hike in insurance costs in September, the industry has seen a lot of negative factors come together in the past few months, leading to major postponement in purchase decisions and overall weakening of consumer sentiment.
