Bumpy ride for automakers but road ahead seems smooth

Bumpy ride for automakers but road ahead seems smooth

Bumpy ride for automakers but road ahead seems smooth

The Indian auto industry hopes the New Year will usher in good times again with some tax cuts, economic revival  and better sentiments after a year marked by low volumes and labour  unrest at some units.

"It has has been a dull and lacklustre year for the auto sector," said V.G. Ramakrishnan, senior director (South Asia, Middle East and North Africa) for automotive practice at consultancy firm Frost and Sullivan.

"But some segments like utility, light and small commercial vehicles   grew. The car segment did not grow significantly while two-wheeler   makers managed to log growth," Ramakrishnan told IANS.

The economic slowdown resulted in lower freight, forcing truck operators   to stick to their existing fleet  and thereby bringing down the sales of  medium and heavy trucks while light and small trucks showed growth,   Ramakrishnan added.

According to the Society for Indian Automobile Manufacturers (SIAM),   cumulative production growth during April-November was just 4.8   percent over same period last year. The industry produced 1,646,495   vehicles in November 2012 as against 1,816,977 in November 2011, a  decline of over nine percent.
In 2011-12, the industry had produced 20,366,432 vehicles of which the   share of two-wheelers, passenger vehicles, three-wheelers and   commercial vehicles was 76 percent, 15 percent, 4 percent and 4   percent, respectively.

Yaresh Kothari, research analyst at Angel Broking, told IANS that the   mining ban in some states like Karnataka and Goa also affected truck   sales. "Overall sales of medium and heavy trucks came down by around   15 percent," he said.

Kothari said that the demand for two-wheelers was also sluggish owing to high fuel costs and that lower-powered motorcycles are registering better growth than high-powered ones.

Out of 16 car manufacturers, nine companies reported decreased   production, three reported marginal growth (less than four percent) and   only four have been doing well this fiscal, as per figures available   with the auto industry.

Carmakers Nissan Motor, Toyota Kirloskar, Honda Cars India, Hyundai   Motor, Maruti Suzuki, Renault India and Skoda Auto are seven companies   that have posted growth during April-November 2012.

"It has been a mixed bag. We saw a number of new model launches and   aggressive pricing from various automotive manufacturers," Takayuki   Ishida, managing director and chief executive of Nissan Motor India,   told IANS.

"There are many variables that caused the slowdown, including   inflation, interest rates and fuel price increase. The consumer   sentiment continued to be down even during the festival season," he said.

According to P.Balendran, vice president at General Motors India, the   entry-level gasoline cars have been hit the hardest, showing a decline in  the growth rate. There was also talk of additional diesel tax which  caused a lot of uncertainties in business and investments plans.

"The interest rates have not been coming down. As over 85 percent of the buyers in the Indian car market purchase cars through finance from banks, there is negative consumer sentiment prevailing and people are postponing car purchases," Balendran told IANS.

On the utility vehicle market, Nissan's Ishida said the segment is growing with projections upward of 30 percent in this segment and that his company's Evalia model was positioned well to meet demands.
Balendran said General Motors was preparing for the launch of Enjoy, an MPV, and Sail, a sedan, as a replacement for Aveo, early next year.

Looking forward, Ramakrishnan said more the 40 new launches are planned by the auto industry in 2013. Experts expect Maruti Suzuki to bounce bank while Mahindra and Mahindra is also readying more new models.

"A decent budget and positive numbers in the index of industrial   production are expected to crank start the sector's fortunes,"   Ramakrishnan remarked, even as others wanted a cut in excise duties to the   2010-11 levels and the introduction of the goods and services tax (GST).

"Import duties on CBUs (completely built units) for cars should be   retained at the same level across all regions to encourage local   manufacturing. There has to be a renewed focus on infrastructure,   especially hybrid and electric vehicles for which funds need to be  made available by the government," Balendran added.

Experts also said while companies are expected to hike their prices in 2013 due to increase in the input costs and unfavourable currency movements, the first half of the next year will continue to be challenging.

Important developments in the auto sector in 2012:

* Labour unrest in Maruti Suzuki
* Daimler India launches India-made trucks
* M&M to buy out US-based Navistar group's stakes in truck and engine joint ventures
* Hyundai Motor India and Ford India announced additional investment
* Two-wheeler makers India Yamaha Motors and Eicher Motors announce expansion