The sales volumes of the car makers in India have been suffering a lot owing to the lousy economic backdrop, which is presently prevailing in the country. The Industry lobby, Society of Indian Automobile Manufacturers (SIAM) declared that the figures for the current fiscal in the passenger car segment have suffered a major setback. This has caused the car makers to reduce their production potential with quite a number of them even shutting-down their units for couple of days.
Over recent times, the passenger car segment of Indian automotive market has been reporting low sales figures for the petrol models. However, it is a possibility that the gloom will be further amplified as the central ministry hinted at a probable hike in the taxes levied on diesel cars. Surge in the prices of diesel are also on the agenda of the government. Since then, the demand for diesel cars, which skyrocketed after the hike in petrol prices in May 2012 too witnessed a dip in its volumes.
The automotive industry has raised a strong voice against the hike of tax on diesel models and has proposed the government to maintain a uniformity of taxes on all the vehicles. According to analysts, the time is right for the centre to take step towards bridging the gap between the prices of petrol and diesel. For the current fiscal, the annual sales forecast of SIAM has been lowered from 10-12 per cent to 9-11 per cent for the passenger cars and for vans it has been bought to 3-5 per cent from the 8-10 per cent.
The forecasts are based on the value of rupee against the US dollar, considering that the crude oil prices and interest rates will be stable throughout the tenure. However, all of these factors have been fluctuating critically over recent few months. The Indian auto industry has now pinned its hopes on the festive season of 2012, which is expected to revive the sales figures and provide a sense of peace to the car makers.
Besides, it is expected that after Presidential elections, which are scheduled to be held on August 7, 2012, the prices of diesel will witness a hike. The Oil Manufacturing Companies (OMCs) have stated that they have been accruing massive loss at the rate of Rs. 10.3 on every litre from quite some time. However, the government has been paying deaf ears to the requests of OMC's to hike the prices of both the fuels. But the scenario was changed in May 2012 after the massive hike in petrol prices and it is believed that the fuel prices are bound to be revised frequently.
After the surge in crude oil prices to its highest in last seven weeks at more than USD 170, oil ministry is planning to schedule a hike in the prices of diesel, kerosene and LPG. After the Presidential election, the ministry will get a proper opportunity to take a turn on the rational decision of the price hike. The prices of diesel are expected to increase by Rs. 5 a litre, LPG by Rs. 100 for every cylinder and kerosene by Rs. 2 for every litre. However, the prices of petrol are speculated to remain untouched till July end, when the oil companies will organise a meeting to analyse the worldwide gasoline prices over last two weeks.
According to an official, “There is broad consensus among key members in the government. But a final call on the quantum of price increase will be taken after consulting political leadership.”
