Commercial vehicles to get dearer starting January – A brew of inflated costs and increasing demand

tata CVs to get dearer

Soon after Tata Motors announced a 2% price hike in October this year, it also announced earlier this week that starting 1st January 2022, the cost of their commercial vehicle range – including M&HCV, I&LCV, SCV & Bus – will see a hike of 2.5%, basis individual model and variant of the vehicle. A brew of inflated costs and increasing demand is the reason for the rise of prices in CV segment.

On similar lines, the cost of commercial vehicles from Ashok Leyland are also set to rise starting January by a fixed 2%. Ashok Leyland’s last price hike was in July this year. Volvo Eicher Commercial Vehicles is also ruminating on inflating the prices as raw materials get dearer.

We are also thinking about a price hike as it has now become imperative. Steel prices have doubled in the last one year and other components like tyres have also seen a sharp increase in the prices. There is no alternative to a price increase.”

~ Vinod Aggarwal, VECV MD and CEO

CV sales have been picking up year on year and the last jump in sales was a substantial 26.4% in October this year.

The price hikes are due to pressure on the raw materials side, but demand has also improved. Particularly for heavy trucks aided by the demand from infrastructure spending, e-commerce and retail.”

Shamsher Dewan, ICRA VP

There has been a steady rise in the cost of steel, aluminum and other precious metals along with the prices of other raw materials. While most CV manufacturers are trying to absorb the costs in the production process, some proportion of it inevitably trickles down to the end user in the form of hike in price. Adding on to it, there has been an invariable increase in market for commercial vehicles to meet the demand created by new age transportation sector. A pickup of sales after a slump of almost 3 years is a also a factor for increase in rise of prices for CVs.

CV sales went from 44,865 units in October 2020 to 56,732 units this year. Commercial vehicle companies have also been launching products with market leader Tata Motors to unlock 21 new variants, refreshes and other new models.

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