Small cars, sports utility vehicles, sedans, and two-wheelers are set to get costlier with automakers raising prices to partially absorb the impact of high material costs.

Kumar Rakesh, senior automobile and technology analyst at BNP Paribas India, said that, raw material prices are stabilizing and price hikes would positively impact the margins of automakers.

Speed breakers such as the third COVID-19 wave triggered via the spread of the Omicron variant in India as well as rising commodity prices might decelerate the automobile industry's recovery.

India Ratings and Research (Ind-Ra) November 2021 report highlights the trends in the sub-segments of the auto sector, including passenger vehicles (PVs) and two/three-wheelers (2W/3Ws), focussing on sales volumes growth.

Ind-Ra revised auto volumes growth forecast to 12%-16% YoY from the initial forecast of 16%-20% YoY. The downward revision is due to a revision in the growth forecasts for 2Ws and PVs.

According to a regulatory filing, Maruti Suzuki India Limited (MSIL) has experienced a price hike of 1.9% on its entire product line which includes Swift, Baleno, Ciaz, S-Cross, Alto 800, and S-Presso.

Ind-Ra expects volume growth to continue in August 2021, driven by improving consumer sentiments and the onset of festive season. It feels the semiconductor shortage could pose supply-side challenges.

According to Ind-Ra (India Ratings and Research), the 193% sequential and 15% YoY increase in the domestic auto sales volumes in June 2021 was due to the relaxation of localised lockdowns.

On a YoY basis, wholesale of two-wheelers grew by just 4%, but PV dispatches improved by 119%. Compared to Q1FY19, the demand and sales of tractors have not been affected by the pandemic.