MG India has said that it would follow other companies in increasing the prices of its vehicles across segments by 2-3 per cent in the coming month because of the rise in input costs like semiconductor chips and logistics.
The company had already hiked the prices of its Hector SUV and Hector Plus thrice this calendar year (January, February and April) due to the rise in input costs.
“You name anything like aluminium and copper, price is going up, crude price going up, steel prices are up and I think it’s really becoming difficult to manage the bottom line and balance how much you absorb and pass on them. And, we are like still a new company, so we make losses. For us, it’s becoming a big challenge, so we have to pass on it,” Rajeev Chaba, President and Managing Director, MG Motor India told BusinessLine in a telephonic interview.
He said there are three things which are impacting the industry – one is the chip shortages, second is the shipping/ the logistics costs which globally is going ‘haywire’ and third is the rising cost of the components. Chaba said though the market is opening up, the supply chain issues persist.
Having said that, he added, “I think things are improving a lot. June was much better than May and I think July will be even better than June, hopefully. We are still struggling with supply-chain constraints, but hopefully in the next two-three months we should improve.”
Chaba added that there are still some markets in the north-east and South that have not yet opened up. But the company’s plant is running close to 100 per cent right now and it is ramping up quickly with manpower also coming back to full attendance, Chaba added.
Passing on costs
Apart from MG Motor, other companies such as Maruti Suzuki India (MSIL), Honda Cars India and others are expected to increase the prices of their products in the current quarter.
“Over the past year, the cost of the company’s vehicles continues to be adversely impacted due to increase in various input costs. Hence, it has become imperative for the company to pass on some impact of the above additional cost to customers through a price rise. The price rise has been planned in the second quarter (July-September period),” MSIL had said in a statement on June 21.