Tata Motors PV May Hike Prices Again In Q2 Due To Commodity Pressure, Says MD Shailesh Chandra

Tata Motors Passenger Vehicles (TMPV) may consider further price increases as commodity inflation is expected to intensify in the September quarter, with the carmaker looking to first step up cost-reduction measures to protect profitability, Managing Director and CEO Shailesh Chandra said.

"Commodity pressure, again, (in) quarter 2 is going to hit us badly. Not only us, but the industry will also get hit with additional increases beyond the 4.5% that was seen in the first quarter. So, H1 is going to be significantly bad as far as commodity prices are concerned," Chandra said after the company's results on Thursday, as per PTI.

TMPV reported a 78.54% year-on-year decline in net profit to ₹859 crore for the June quarter, compared with ₹4,003 crore a year earlier, as per PTI.

Revenue from operations, however, increased 9% to ₹95,799 crore from ₹87,677 crore.

Cost Cuts First, Price Hikes Later

Commodity inflation alone reduced the company's domestic margins by nearly 4.5% of revenue during the first quarter, while battery cell costs rose 10% sequentially, adding to pressure on electric vehicle margins.

Chandra said carmakers do not immediately pass the entire rise in input costs on to consumers and instead first seek savings internally.

"And that is the approach we are going to follow. So, we are definitely accelerating and dialling up more on cost reduction. But at the same time, we are taking price increases in smaller increments than the kind of commodity price increase that we are seeing," he said.

According to a report by Business Today, the additional price hikes could include ICE and EV models, by up to 1.5% from July 1, following an earlier increase for ICE vehicles in April.

He also indicated that EVs could face relatively greater cost pressure. “

"EV inflation might have been slightly higher… The outlook can be slightly more adverse for EVs as compared to ICE. But we have a more steeper cost reduction plan as far as EVs are concerned because of redesign of some of our subsystems," Chandra, as per the report.

Profits Hit By Costs And JLR Headwinds

TMPV's domestic business recorded 65% revenue growth, while passenger vehicle volumes rose 46% and EV volumes increased 112% year-on-year, as per PTI. However, elevated commodity prices and adverse Forex movements moderated margin improvement.

Jaguar Land Rover wholesales fell 9.2%, affected by temporary supply constraints, including a fire at a key component supplier, the West Asia conflict and the planned Jaguar wind-down.

Meanwhile, Chandra said the impending leadership transition at Tata Sons would not affect TMPV's strategy or investment plans.

The company remains committed to its previously announced capex of up to ₹40,000 crore over five years as it targets higher volumes and a 20% domestic market share by FY31, as per PTI.