As demand for vehicles grows , automobile makers believe that frequent price increases will not happen anymore. Price hikes will now become seasonal.

Rising inflation had forced auto makers to announce repeated price increases over the past year. But now with the commodity prices starting to soften, players are anticipating getting relief in the second half that would cut down the need for frequent price increases.

"The frequent price increase due to commodity prices has gone down and there will now be a more periodic and natural increase that ideally, the Original Equipment Manufacturers (OEMs) take as they add features. There will be pressure after March when you are transitioning to a new emission mode," said Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles Ltd, and Tata Passenger Electric Mobility Ltd

Demand-supply mismatch

As the demand for automobiles has been robust, the supply of vehicles, despite constraints, is getting stable. The industry supplied 1 million vehicles in this quarter despite facing restrictions due to Covid-19 and semiconductor issues.

"The industry has been able to supply 3.4 million cars so the periodic pent up that was getting built in the supply situation was earlier stressed but now has come to a more equilibrium situation. The semiconductor issue pertains but must manufacturers have found alternatives to mitigate the problem," added Chandra.

Industry experts said there could be a shortfall in supply immediately after the festival season. "A lot of time goes into maintenance. There could be a short supply post festival but it should not last for long. Rampant production is going on in manufacturing units as dealers across are completely booked. Passenger vehicles will witness double-digit growth in September and October," said Manish Raj Singhania, President, Federation of Automobile Dealers Associations (FADA).

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