Prices of discretionary products such as cars, televisions and smartphones have started to firm up with prices of several commodities like copper and aluminum, components such as memory chips and display panels, and a weakening rupee has started taking a toll on the bottomline of the manufacturers.
Car manufacturers like Maruti Suzuki, Honda Cars India, Toyota Kirloskar Motor and Kia India have just raised vehicle prices, mostly on fast-moving models, by up to 3% due to increase in commodity costs and adverse forex movement. Other manufacturers are also evaluating such a hike.
In electronics, prices of new smartphones have factored the single digit price increase in components such as memory chips and display panels whereby prices of such new launches might increase by 2-3% than originally planned, said market tracker Counterpoint’s research director Tarun Pathak.
Computer prices may also firm up for new launches due to these two components, while for older models the usual price drop is getting postponed, industry executives said.
Several smaller television brands have in the last two weeks hiked prices across models by 5-7% due to a 30-35% sequential increase in television panel or open cell prices last quarter. Open cell accounts for 65-70% of the total material cost. The large brands are going to follow suit, executives said.
Lenovo India managing director Shailendra Katyal said there is an inflationary environment for some components in the last 3-4 months.
Top electronic contract manufacturer Dixon Technologies managing director Atul Lall said prices of commodities like copper, aluminium, zinc and some polymers have gone up, having a varying impact on production costs.
Maruti Suzuki increased prices of hatchback Swift by INR 25,000 and Sigma variant of its sport-utility vehicle model, Grand Vitara by INR 19,000 – both among the top-selling models for the company in their respective segments.
Kia, which added certain features like panoramic sunroofs in lower trims, raised prices by up to 3% on these variants and in others there has been a 1% increase to offset the rise in input costs and the impact of adverse forex movement.
Most companies had factored INR at 82 against the dollar in their existing pricing strategy, but the currency is now at record lows of around INR 83.5.
However, companies don’t expect any significant impact on demand due to these price increases.
Samsung India senior vice president (visual display business) Mohandeep Singh said consumers upgrade their televisions every 6-7 years and a few percentage point increase in prices is unlikely to impact demand.
Kia India national head (sales & marketing) Hardeep Singh Brar said there has been a good demand in the first half of April because of Navratri.
“While there are some discounts in the market as stock levels have gone up, it’s on slow moving models. With the elections starting on April 19, there will be fewer business days in the rest of the quarter. There are also restrictions in carrying cash upwards of INR 50,000. So customers may get apprehensive. We have to watch how sales fare in the second half of the month,” said Brar.
Demand has improved this year for several products such as smartphones whose shipments last quarter has gone up by over 10%, as well as televisions, AC and refrigerators. Car sales went up by 11.5% year-on-year last quarter as per Society of Indian Automobile Manufacturers data.
Avneet Singh Marwah, chief executive of SPPL that has the licence to sell Kodak, Thomson and Blaupunkt television brands in India, said after the 5-7% price hike in television prices in April there will be another round of 5-7% hike in May as well.
Home appliance manufacturers are also planning a price hike on refrigerators, AC and washing machines soon once new raw materials with higher prices go into production in 1-2 months, said Godrej Appliances business head Kamal Nandi.
Smartphone market tracker IDC India associate vice president Navkendar Singh said the overall average selling price (ASP) is continuing to go up this year.
“We expect the smartphone market will grow by 10% in the January to March quarter despite an increase in ASPs. If the growth momentum continues in April to June quarter and considering other factors like chip price or memory price hike, clubbed with geo-political tensions (impacting oil prices), the ASPs is estimated to grow further,” said Singh.
