Auto, appliance prices likely to rise as input costs jump

Automakers are considering 2-3 per cent increase in prices, while consumer electronics and appliances may become 5-6 per cent costlier, reflecting their heavy use of plastic components.

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Prices of cars, two-wheelers, televisions, refrigerators and air conditioners are expected to rise up to 5-6 per cent from April. Manufacturers are grappling with a sharp surge in cost of inputs — including crude derivatives such as plastics, resins, and polymers — higher international freight rates and rupee depreciation triggered by the Gulf war.

Automakers are considering 2-3 per cent increase in prices, while consumer electronics and appliances may become 5-6 per cent costlier, reflecting their heavy use of plastic components. Luxury carmakers Mercedes-Benz and Audi have announced price increases of around 2 per cent effective April 1, while mainstream carmakers are finalising their revisions. Manufacturers said prices of shoes, synthetic fibre-based apparel and decorative household paints could also rise by up to 9–10 per cent.

Chief executives across sectors said the price hikes could erode some of the sales volume gains from recent GST reductions, but emphasised they have limited options as supply chains have turned increasingly volatile.

“A price hike is inevitable,” said Kamal Nandi, head of the appliances business at Godrej Enterprises.

Some pausing hikes in March

“We will increase prices from April, possibly by 5–6 per cent,” said Nandi of Godrej Enterprises, which manufactures refrigerators, washing machines and ACs. “Input costs have risen sharply over the past month. Every time we speak to our plastic suppliers, they are raising prices and are unwilling to commit to long-term contracts.”

A senior auto industry executive, who requested anonymity, said most manufacturers are planning price hikes from April. “Input costs are rising. Companies are holding back immediate increases as March is an important month before the financial year end to meet sales targets,” he said.

The Automotive Component Manufacturers Association (ACMA) recently informed the government that imports of key inputs such as chemicals, synthetic rubber, aluminium scrap and petrochemical-based materials like polypropylene are getting delayed along with cost escalations due to shipping disruptions.

“While the government and industry are making all efforts, supply chain disruptions are intensifying fast,” said Vinnie Mehta, director general, ACMA. “The conflict in West Asia continues to create uncertainty, and we are closely monitoring developments.”

Company executives said prices of crude derivatives such as plastics, resins and polymers — including polyethylene and polypropylene used in packaging — have climbed by up to 25 per cent in the past month. A similar increase was seen in polyester staple fibre prices.

International freight rates have jumped 7–10 per cent, inflating the landed cost of imported raw materials and components, while the rupee has depreciated by about 2 per cent against the dollar.

Berger Paints India will be raising prices by about 5 per cent on average for solvent-based products, waterproofing emulsions and industrial paints from March 25. “We will continue to monitor input prices as they are changing on a daily basis,” said Abhijit Roy, chief executive officer. “We may have to consider a second phase of price increases soon.”

Harkirat Singh, managing director of shoe brand Woodland India said the company’s suppliers “are asking us to increase prices as they are buying raw materials at significantly higher costs” and that the company could increase prices by 8–12 per cent from April.