new delhi, Feb. 4 -- For Indian automakers, a surge in sales after the September tax cut has been eclipsed by a new concern: soaring raw material costs. Many are contemplating price increases at the risk of suppressing demand. In their December quarter earnings calls, companies including the largest carmaker Maruti Suzuki India Ltd, peers Tata Motors Ltd, Hyundai Motor India Ltd, and two-wheeler manufacturers TVS Motor Co., Bajaj Auto Ltd, and electric scooter maker Ather Energy Ltd have flagged rising prices of key inputs such as steel, aluminium and copper. Combined with a depreciating rupee, higher prices are weighing on their profitability. "I don't think anybody knows what's happening," Tarun Mehta, co-founder and chief executive at Ather, told analysts on 2 February. "This is truly unprecedented in every way. There are a lot of commodities going haywire." The pressure to increase prices could threaten a rebound in the world's third-largest auto market after the reduction in goods and services tax (GST) and the festive period bolstered demand to a record in the quarter ended December. According to data from the Society of Indian Automobile Manufacturers (Siam), passenger vehicle sales during the period grew 21% to 1.27 million units, while two-wheeler dispatches rose 17% to 5.69 million units, and commercial vehicle offtake grew 22% to 290,085 units. Since the beginning of October, nearly all the key raw materials have turned costlier amid geopolitical uncertainties and higher demand. According to Trading Economics data, aluminium and copper have climbed 15% to 25%. Platinum has surged more than 40%. "Some of it is fundamental. There are some commodities that do seem to secularly be in a demand-supply gap," Ather's Mehta said. "A lot of them probably seem to be stuck in some sort of a hype situation right now. Even hype situations can last a couple of quarters; so, you can't exactly predict. So, we are preparing for the worst." Major currencies such as the US dollar, euro, and China's renminbi have appreciated by 4-5% since October, materially increasing input costs for auto suppliers, according to Anurag Singh, advisor at consulting firm Primus Partners. "At the same time, although OEMs (original equipment makers) are seeing higher volumes, intense competitive pressures are limiting their ability and willingness to absorb cost increases." Hyundai Motor India said commodity prices were weighing on the industry's margins. The industry has been going through tough times, K.S. Hariharan, head of investor relations at the Indian unit of the Korean giant, said on Monday. While the company has tried to absorb some costs, he said, some of that has been passed on in a January price increase, mainly on the Venue compact SUV. K.N. Radhakrishnan, director and chief executive at two-wheeler maker TVS Motor, said on 28 January that prices of aluminium, copper, zinc, platinum, palladium, and rhodium have risen. These metals are used in automobile bodies and multiple parts, including engines, exhaust systems, and electrical components. "The strength of the company has been when the volume is growing, we are able to get the scale benefits, and we are also able to drive our cost down programme, and we have been very prudent," Radhakrishnan said. "We keep looking at price increases, and if you look at recently, we have taken up about 0.2, 0.3 percentage price increases." TVS Motor's peer Bajaj Auto plans to increase prices in the January-March quarter. "As it turned out, given the beat on volumes that we saw through the festive season, we chose to defer all pricing actions to the start of this current quarter, essentially January, and therefore taking none to cover the inflation last quarter," Dinesh Thapar, chief financial officer at Bajaj Auto, said on 30 January. Maruti Suzuki said on Monday that it is reviewing price hikes amid rising commodity prices, days after the company told analysts in a 28 January call that higher commodity costs led to a 60-basis-pointmargins hit in the December quarter....