January 10, 2013
NEW DELHI: Has the Indian car market lost steam? Against expectations of a boom in India which was being projected as the next big frontier for global carmakers battling financial crisis and stagnation in Europe and the US, the market has slowed down considerably, with growth rate projected to fall to a 10-year low.
January 10, 2013
NEW DELHI: Has the Indian car market lost steam? Against expectations of a boom in India which was being projected as the next big frontier for global carmakers battling financial crisis and stagnation in Europe and the US, the market has slowed down considerably, with growth rate projected to fall to a 10-year low.
Against expectations of a boom in India which was being projected as the next big frontier for global carmakers battling financial crisis and stagnation in Europe and the US, the market has slowed down considerably
Not only that, lobby group Society of Indian Automobile Manufacturers (Siam) has said that the industry will not be able to meet the government's target of achieving $145 billion turnover by 2016, and this needs to be extended by as much as a decade.
The pessimistic outlook goes against the accolades the Indian market had been receiving just two years ago before high interest rates and slowing economy depressed sentiments and started to pull the market down. While many carmakers say privately that they will be going slow on new investments, some like the Volkswagen group have come out in the open, expressing reservations over the way the market has been behaving.
The Volkswagen group, Europe's number one carmaker that runs three key brands here (VW, Skoda and Audi), made its intentions clear when it said recently that it will not make any fresh investments in India till 2015, blaming the government for the change in its otherwise bullish stance. "The policy framework here is not stable. Which company will like to invest?" John Chacko, MD of Volkswagen India, said. The official blamed "uncertainties on fuel prices and diesel policy", apart from the poor economic climate, among reasons prompting the group to go slow in the market.
Siam has itself not been able to gauge the market mood correctly as it has been deteriorating fast. The auto body made its third downgrade to its original car sales forecast for this fiscal and said the growth will be only 0-1 % against the healthy 10-12 % projection it had given at the beginning of the year.
The actual performance in the first nine months brings this out evidently. Car sales in the April-November-12-13 period have fallen by 0.33% at 13.81 lakh units against 13.86 lakh units in the same period last year. As many as 10 of the 19 carmakers who report their numbers to Siam have seen volumes go down year-on-year and these big ones like include Tata Motors , Ford, General Motors, Toyota and VW. Even market leaders Maruti Suzuki and Hyundai have managed a low single-digit growth and complain of the difficult times.
Mayank Pareek, COO (sales & marketing) at Maruti Suzuki, said that the going will remain tough in 2013 too. "People buy cars when they feel good. The overall factors are not that positive now," Pareek said. Hyundai's sales & marketing VP Rakesh Srivastava is equally worried. "If the current macro-economic conditions continue to prevail, then the challenges will become stronger."
Most of the companies are now pinning their hopes on the Budget to get a relief from the troubled times. Also, they expect central bank RBI to take some action on interest rates and bring them down gradually. "It will continue to remain very challenging unless the government improves market sentiments. We are looking for some positive energy in the market through government's efforts in terms of economic reforms and RBI's moves on interest rates," Toyota's deputy MD Sandeep Singh said.
Courtesy: ET
