Tata Motors PV mulls bigger price hikes in Q4 as commodity costs bite: MD & CEO Shailesh Chandra

Tata Motors Passenger Vehicles is weighing a bigger price increase in the fourth quarter of FY27 as rising commodity costs continue to squeeze margins.

“We would consider a price hike in Quarter 4. With the pressure that we have on the input cost side, we might go for slightly higher price increase as compared to what we have been taking,” Shailesh Chandra, Managing Director & CEO, Tata Motors Passenger Vehicles, said during the company's post-earnings media conference call.

Tata Motors Passenger Vehicles faced significant input-cost pressures in the first half of FY27, particularly from commodities such as steel, rubber and copper.

While calibrated price increases and cost-reduction initiatives have helped offset 40% of the impact, around 60% of the commodity cost increase continues to be absorbed by the automaker, according to the company’s CFO Dhiman Gupta.

EBITDA margin of Tata Motors’ domestic passenger vehicle business stood at 4%, down 180 basis points year-on-year, while its EBIT margin was negative 0.3%, declining 50 basis points.

The margin pressure is expected to persist in the third quarter, with the company anticipating some improvement in profitability in Q4 as it steps up cost-reduction efforts and considers further price increases.

The automaker, however, is keen to avoid passing on the entire cost increase to customers immediately, given the possibility that some commodity prices could moderate. Chandra said the company was assessing which cost increases were structural and which were likely to ease before deciding on the extent of price revisions.

The pricing outlook comes amid sustained demand for passenger vehicles. Tata Motors reported its highest-ever quarterly volumes of more than two lakh units in Q2 FY27, up 40% year-on-year, taking its domestic market share to 14.3%.

Discounts on a decline

With inventory levels of less than 30 days, Tata Motors Passenger Vehicles MD Chandra doesn’t see a trigger for discounts in the near term.

Discounts have come down over the past two-three quarters and the festive-season offers were largely restricted to specific models and variants where dealers had available stock, said Chandra.

He added that inventory at the dealer level remained around 30 days or lower, both for Tata Motors and the broader industry, reducing the need for aggressive promotional schemes.

“Given that we have been seeing sustenance of demand at very high levels, and still the inventory levels at the channel level are around 30 days and less than 30 days, I don't see, therefore, a trigger to a discount environment in the near future,” Chandra said.

“Discounts might be only for models where there was stock available and where dealer at their level would have given discounts. Generally, the discount environment is not what it used to be in FY26 or so,” Chandra noted.

Tata Motors Passenger Vehicles’ domestic business witnessed sustained customer demand during the festive season with a nearly 10% increase in retails.