Indian Automakers on Alert for Another Round of Price Hikes Amid Rising Commodity Costs & Supply Chain Pressures 

India’s automakers could be staring at another round of vehicle price hikes as rising commodity costs, supply chain disruptions and geopolitical tensions begin putting pressure on their margins, despite demand recovering following the GST rationalisation in September 2025. Inflation in key raw materials such as steel, aluminium, copper and platinum group metals is forcing companies to revisit pricing strategies, despite ongoing efforts to offset costs through localisation, value engineering and operational efficiencies.

Hyundai Motor India said commodity inflation had already shaved off around 120 basis points from margins in the last quarter on a sequential basis, although part of the impact was one-time in nature. “We will be looking at a price increase sometime in May. We agree that the commodity is unstable. We don't know what will happen next,” Tarun Garg, Managing Director and Chief Executive Officer of Hyundai Motor India said. Despite the pressure, Hyundai said it remains committed to maintaining its operating margin guidance of 11-14% through a combination of higher volumes, better plant utilisation and cost optimisation initiatives.

The automaker is banking on 8-10% domestic growth and a similar rise in exports in FY27 to help cushion the impact of inflation. The launch of two new SUVs from its Chennai plant is also expected to improve capacity utilisation after production of the Hyundai Venue was partly shifted to Pune last year. Hyundai added that it would continue focusing on localisation and value engineering to offset rising material costs before fully passing them on to customers. Garg added that any price increase would be taken through a “calibrated approach” depending on market conditions, volumes and profitability.

The situation is similar at Mahindra & Mahindra, where inflationary pressures and supply-side bottlenecks have already started affecting profitability. The company’s automotive EBIT margins remained largely flat at 10.9% in the fourth quarter of FY26 despite strong demand. It has already announced price hikes of up to 2.5% on its internal combustion SUVs and commercial vehicles from April 6, while its tractor business has also raised prices citing higher input costs. The company said sustained increases in commodity prices had pushed up manufacturing costs, although the extent of the hike varies across models and regions.

The company has been strengthening supply chain resilience by increasing localisation, reducing single-source dependency and building inventory buffers for critical components. It has also set up an “intelligence desk” for real-time supply tracking and commodity hedging.

Amarjyoti Barua, Group Chief Financial Officer at Mahindra & Mahindra, said the company is differentiating between temporary commodity spikes and structural disruptions that may require long-term pricing action.

“There are two types of commodities: those who are facing a temporary issue because of the current situation and those that might see some structural issue because of the disruption in global supply chain like aluminium where the constraint is seems to longer,” Barua said.

“The ones that are structural there are multiple actions we have to take with price increases being one of them. We'll make sure we're hedged in 90% of our purchases. We might have to look at price increases again if there are structural issues like that.”

However, the company said it remains cautious about overreacting to temporary inflationary spikes. “But right now we can't react to temporary inflation and end up creating a price point which is inaccessible. So that's the balance we're striving for,” Barua added.

At Maruti Suzuki India, the challenge is especially sensitive because the company’s strongest recovery is currently coming from small and entry-level cars, where customers are highly price conscious. The automaker said demand for hatchbacks and mini cars rebounded strongly after GST cuts improved affordability. Sales of small cars rose nearly 75% year-on-year in April, while mini car volumes more than doubled to 16,066 units.

“From the month of April, our production team has been able to partly unlock the production capacity for the small cars, and as the demand is there. We have been able to supply that,” said Partho Banerjee, Senior Executive Officer for Marketing and Sales at Maruti Suzuki India Limited. 

But the company acknowledged that rising costs may soon force it to raise prices despite trying to protect first-time buyers. “In the small car segment in H2, we had very good growth of almost 12%. The company’s supply chain is actively managing production challenges. The traction is very good, even in the month of March, we have a waiting period of almost one month. But very soon, we are going to review that we need to increase the prices and pass it on to our customers,” Banerjee said.

He added that Maruti had delayed price hikes to support affordability in the entry-level segment. “But the management will very soon be taking a call to increase prices since there is a pressure. Our other OEM partners have increased the prices. But keeping in mind the first-time buyers, we have been holding it on,” he said.
Maruti also warned that any increase in fuel prices resulting from the West Asia crisis could directly hurt demand in the small car segment, where running costs remain a key purchasing factor. “On production, right now we are good but on the cost part, there is an impact,” Banerjee said.

The broader industry has already begun responding to the cost pressures. Carmakers including Tata Motors, JSW MG Motor India, BMW India, Mercedes-Benz India, Audi India and Honda Cars India have either implemented or announced price increases from April 2026 onward.

While mass-market manufacturers are attempting to soften the impact through cost controls and selective hikes, luxury brands have already raised prices by up to 2% citing input cost inflation, logistics expenses and currency depreciation. For now, automakers appear willing to absorb part of the inflationary burden to preserve demand momentum, especially after the GST-led recovery. But if commodity prices remain elevated for a prolonged period, the industry may have little choice but to pass on more of the costs to consumers in the coming quarters.