Indian auto companies happy with the steel price cuts

Indian auto companies happy with the steel price cuts

The steel price cuts in India enable the auto companies, which were buckling under the pressure of soaring input prices, to take a breath. More than the price cuts, the auto sector is also happy with the regime of price stability implemented by Tata Steel. Auto companies had to absorb more or less the entire impact of the increased raw material cost. The constant rise in prices of inputs such as steel during last year and the first six months of this year put under pressure the auto sector. Furthermore, an official from Tata Motors pointed out that these price cuts will help us to offset the impact of the rising fuel prices. Automakers are not expected to reflect the utility of the price cuts to the customers, but the decline in prices is predicted to ease the pressure on margins. The price cuts will affect the commercial vehicle and passenger car segment more positively than the two-wheeler segment. The reason for this is that prices of steel, which constitute nearly 20-25% of the cost of inputs in a commercial vehicle, have more than doubled in the last financial year.