Tata Motors To Raise Prices Of Commercial Vehicles By 5% From April

Tata Motors (TML) will increase prices of its commercial vehicles (CV) range by 5 percent starting April 1, ahead of the transition to the BS 6 phase II new emission norms.

This would be the fourth price hike by India’s largest automobile maker this fiscal year-- the first one was announced last March and came into effect from April 2022. Thereafter, TML has implemented price hikes in July 2022 and January 2023. The total price hike thus taken by the CV maker is around 12 percent (see chart).

“The decision to increase prices is a result of the company’s efforts to comply with the more stringent BS6 phase II emission norms. As Tata Motors transitions its entire vehicle portfolio to meet these standards, customers and fleet owners can expect a range of cleaner, greener, and technologically superior offerings that deliver higher benefits and lower total cost of ownership,” the company said in a statement.

The price increase will be applied across the entire range of commercial vehicles, with the exact amount varying according to the individual model and variant.

In February, the company posted a 4 percent year-on-year rise in CV sales in the domestic market to 35144 units. But, its international shipments dipped by 61 percent, dragging the overall CV sales numbers by 3 percent.

After the third quarter results, HDFC Securities report highlighted that the India CV business has posted a strong 340 basis points quarter-on-quarter margin expansion for TML to 8.4 percent on the back of softening input costs and reduced discounts. The analysts further noted that the TML management expects input costs to rise again from the first quarter of 2023-24, and that they have consciously started reducing discounts from September.

As such, the overall CV industry is expected to post a 26 percent year-on-year growth this fiscal closing the year with close to a million units.

A CareEdge Ratings report from November shows that the medium and heavy commercial vehicles (MHCV) segment is expected to grow by 22-24 percent this fiscal year, while light commercial vehicles are likely to clock an 18-19 percent growth.

“The strong growth traction, driven by an overall improvement in economic activities, rapidly growing infrastructure development with private and public capex, higher fleet utilisation levels, the thriving ecommerce sector, and a rebound in replacement demand augurs well for the industry,” the CareEdge report had quoted.

• In recent months the company has taken around 12% price hikes for its CV range
• Discounts have reduced
• Q3FY23 CV business margins had increased 340 bps