The government has recently declared that the car sales in Indian auto industry is likely to get a boost in the second half of fiscal 2013. Industry experts believe that the announcement from the government came at a perfect time as the festivities are set to commence any time soon.
On the other hand, auto makers are excitedly waiting for the FDI norms in areas like aviation and multi-brand retail, which will result in improved buyers' sentiments and economic growth as a whole. Adding a feather to hat, a positive affect on sales will be laid by the Reserve Bank of India's Cash Reserve Ratio (CRR) cut, as the banks will now lend auto loans on a reduced rate of interest. This move will help the auto companies to a great extent as more than 70 per cent cars are financed.
On this, the Chairman of Maruti Suzuki India Limited, R. C. Bhargava commented that the initiative by Central Bank will provide more liquidity to banks, enabling them to lend more financial help to new customers. He further added, “All the things that have happened should lead to improved sales in the remaining six months. An improved investment climate will mean more money in the hands of people. But, long-term growth will really depend on implementation of the new measures.”
Between the first five months of this fiscal, the passenger vehicles sales, including passenger cars, Utility vehicles (UVs) and vans, witnessed a fall of 4 per cent amounting to 1.84 lac units. The situation was affected by the whopping fall in the deliveries of passenger car segment, which stood at 19 per cent. On the other hand, in fiscal 2012 the passenger vehicle sales went up by 5 per cent, which amounted to 2.6 million units.
Volkswagen's Chief Representative for India, John Chacko said that the reforms are framed in right direction and thus, its effect will be seen in the sales records of October-November. He added, “We're quite optimistic and frankly it can’t get any worse now. The clearer policy stance will help us firming up our decision to invest in a local engine plant.”
At the same time, hike in the diesel prices is also expected to pace up the petrol car sales in India. Between April and August 2012, the share of petrol models against diesel has reduced to 53 per cent from around 25 per cent in early 2010. This gap has pressurised various auto makers that have established production units to manufacturer more petrol engines under the review of diesel ones.
Interestingly, iconic models like Maruti Suzuki Swift hatchback and Hyundai Verna sedan are offered with both the fuel options, but their diesel versions accounts for more than 80 per cent of the total sales. On this, the Director-General at Society of Indian Automobile Manufacturers (SIAM), Vishnu Mathur, said that the chances of “Immediate spurt in demand” is not so strong, but it will surely come out with some results in near future. He further added, “Though there is still a significant gap between petrol and diesel prices, those that had been sitting on the fence till now may opt for petrol cars instead.”
