In a surprising development, the auto industry experienced a small revival of sorts when car sales increased for the first time after dipping constantly for four months on Year over Year (YoY) basis. Credit Suisse has prepared a report that calculates the overall sales volumes for the Indian auto sector to have increased by 6 per cent (YoY) in November 2011. This upswing is in spite of a 19 per cent YoY loss of sales faced by Maruti Suzuki. If Maruti's losses are not accounted for, the total sales went up by a stupendous 34 per cent, an excellent showing by an industry that was struggling till October 2011.
The leader of the pack in this unexpected YoY increase is Tata Motors, which grew by as much as 92 per cent in November. Toyota's new launches this year also contributed to the excellent figures as buyers lapped up the Etios and Etios Liva in their respective segments.
However, according to the report, the market outlook will remain bleak and car sales will not experience any huge upswings in coming times. This is in the wake of an economic slowdown in the country and crumbling employment scenario. Though, two-wheeler makers also recorded positive sales volumes, companies like Bajaj Auto and TVS Motors showed that the market is slowing down and sales volumes could dip soon.
The tax exemption levied by the Uttarakhand government has also been lifted and tax rates in the state are also set to rise. According to state laws, companies enjoy a 100 per cent income tax exemption for five years, while the weighted average deduction is set as 200 per cent for Research and Development (R&D). The taxes for companies under the coverage of Credit Suisse had reduced from 28 per cent to 20 per cent in the past few years due to such lax taxation laws. However, the exemptions will be lifted and companies will have to shell out more for taxes. While Bajaj Auto and Tata Motors will be affected by this change in regulations from FY13, Hero Motocorp and Ashok Leyland will suffer from FY14.
Suzuki and Honda are looking to develop diesel engines for the Indian auto market. The two companies affirmed their plans to create such an engine for this booming market at the Tokyo Motor Show. Suzuki spokesmen said that the company is focussing its energies upon a small two-cylinder engine. Maruti Suzuki, India's largest car maker, has already announced that it will exhibit two new utility vehicles at the event. The company is also expected to procure some additional diesel engines from its joint venture with Fiat in the month of January, 2011.
