Tata Motors Says No Plan to Fully Pass on Commodity Cost Surge to Customers Amid West Asia Headwinds

Tata Motors will not fully pass on the sharp rise in commodity prices to customers despite facing significant cost pressures and disruptions linked to the ongoing West Asia conflict, Managing Director and CEO Girish Wagh said, as the company seeks to protect growth momentum in the domestic commercial vehicle market.

The company has already implemented a price increase of around 2% from April 1 to partly offset the impact of rising input costs, but said it would absorb the remaining burden through internal cost management measures.

“The impact of commodities is quite severe. We had a 100 BPS increase in Q4. In Q1, the increase has been even more and we have taken a price increase of around 2% on 1st of April. Rest, of course, we have decided not to pass through and we are going to work on other cost agenda to ensure that we are able to manage this situation, because we do not want to disturb the growth momentum by passing on the entire commodity increase. But the commodity increase has been quite severe,” Wagh said. 

Automakers are grappling with rising prices of steel, aluminium and other commodities, while higher crude oil prices due to the war are adding pressure on fuel costs and operating economics for transporters.

Wagh said diesel prices remain a critical factor for the commercial vehicle industry. “In some segments the diesel price or cost of diesel is almost 50 percent of the cost of ownership, I think that remains a very important monitorable", adding that they are actively watching what these mean for the operating economics of a fleet owner.

The company has also tightened its cost controls and is reviewing expenditure plans more cautiously amid macroeconomic uncertainty.

“Control in expenses are absolutely required. And we have, in fact, taken some of those steps right from the month of April to ensure that we are therefore better prepared to address this headwind that we are facing. And it won't be wrong to say that we are actively watching some of the important external and macro indicators to ensure that we are able to align our plans immediately,” he said. 

However, the company said it is not cutting planned investments for the year, though timelines for some spending could shift.

Despite geopolitical disruptions, Wagh said underlying domestic demand indicators remain resilient. “If we see the freight availability, as also the e-way bills, which is a good indicator of the truck movement, truck utilisation continues to be very healthy,” he adds. 

The crisis had also initially disrupted LPG supplies and labour availability in parts of the supply chain, though Wagh said the situation has stabilised after government intervention. “After initial hiccups in the month of March, I think the month of April and May has been comparatively smoother. Although I can certainly say that there have been a few other challenges on the supply chain side, specifically from the area of labour availability, which I think the company has been managing as it comes,” he said. 

The company remains cautiously optimistic about FY27 demand and expects the commercial vehicle industry to post single-digit growth despite external risks. “We still believe that the rate at which things are progressing, a single-digit growth for the year over the previous year when we saw good growth in H2 should still be possible. But there are quite a few parameters that we need to continue to track, whether it is the current headwinds due to the Middle East crisis, it is the diesel price, and it is also about the rainfall, which will start maybe from next month or end of this month,” he said. 

For FY26, consolidated revenues stood at ₹83,900 crore, while EBITDA margin came in at 12.3% and EBIT margin at 10.2%. Full-year profit before tax (before exceptional items) rose 7% year-on-year to ₹6,100 crore, while profit after tax stood at ₹3,000 crore, impacted by exceptional charges of ₹1,400 crore related to the New Labour Code and demerger-linked costs.

The company said FY26 marked its strongest operational performance in over a decade and a half, with EBITDA margin reaching its highest level in 15 years. EBIT margin expanded 180 basis points year-on-year to 11%, while profit before tax climbed to a record ₹8,682 crore, up ₹2,721 crore over FY25. The company also reported its highest-ever revenues, EBITDA and profit before tax during the year.
Domestic and export volumes grew 12% and 54% year-on-year, respectively, in FY26. Tata Motors’ domestic commercial vehicle market share stood at 35.7%, while its heavy commercial vehicle market share strengthened further to 55% by the end of the year.

The company also described FY26 as a landmark year for product leadership, having launched 17 next-generation trucks aimed at raising benchmarks for safety, profitability and operational efficiency.