Indian consumers are likely to begin the New Year facing higher prices for vehicles, as automakers prepare to pass on the impact of rising commodity costs and a weaker rupee.

Following a sharp increase in the prices of key inputs such as copper, aluminium, and precious metals, including palladium and rhodium, several carmakers are expected to raise prices by up to 3% from January.

This would mark the first round of automotive price increases since the reduction in goods and services tax (GST) rates, which took effect on September 22nd.

"Typically, companies implement a price hike in the first month of the calendar year, and a similar trend is expected in 2026, particularly due to a strong booking pipeline and the likelihood of healthy demand in the months ahead," said a senior analyst at a market analysis firm.

He further added, however, that the extent of the increase may be constrained by intense competition for market share. Data compiled by a market research firm showed that the average prices of platinum and palladium surged by 36% and 19%, respectively, year on year during the eight months to November, while copper and aluminium prices rose by 6% and 3%, respectively.

As these precious metals are largely imported, the depreciating rupee has further intensified cost pressures.

The industry last benchmarked production costs when the rupee was at Rs. 88 (US$ 0.98) to the dollar, compared with the current level of around Rs. 90.

Automakers have already begun announcing price revisions. JSW MG Motor India said it would raise prices by up to 2% across its product range from January 1st, citing rising input costs and macroeconomic factors.

BMW Motorrad India has announced a price hike of up to 6% across its motorcycle portfolio, effective on the same date.

BMW Group India President and Chief Executive Officer Hardeep Singh Brar said sustained foreign exchange pressure resulting from the rupee's sharp depreciation against the US dollar and the euro, along with higher raw material and logistics costs, has affected profitability.

Luxury carmaker Mercedes-Benz India has also announced a price adjustment capped at 2% across its entire model range from January 1st.

The company said persistent foreign exchange pressures, elevated commodity prices, higher logistics expenses and inflationary trends throughout 2025 have necessitated a selective price correction, despite its aggressive localisation strategy.

Electric two-wheeler manufacturer Ather Energy said it would increase scooter prices by up to Rs. 3,000 across all models from next month, attributing the decision to rising raw material costs, foreign exchange volatility, and higher global prices of key electronic components.

Additional automakers are expected to follow suit. Tata Motors, Mahindra & Mahindra, Hyundai Motor India, and Kia India are among the companies that may consider price increases in the coming months.

According to a Tata Motors passenger vehicle dealer, the company earlier this month sent an email to dealers indicating "a potential increase in price in January 2026, the quantum of which is still under review."