Monday, July 11, 2011
By Pranjal Gera
Sales growth rate to dip further in Inida
Industry sources reveal that the Indian auto industry, the second fastest growing car market after China, will face even tougher phases in coming time. High interest rates and sky rocketing fuel prices will cut down the sales growth rate more than predicted earlier.
In the financial year 2010-2011, Indian auto market saw a growth rate of neck breaking 30 per cent, but now under the current situation, the growth rate is expected to be around 11 per cent to 12 per cent as compared to 14 per cent to 15 per cent predicted earlier. June 2011 was the slowest month in terms of car sales in India, the third largest economy of Asia since May 2009. Car sales in India are chiefly handled by the inspirational middle class strata which rely heavily on bank loans for purchases.
The central bank of India, in a bid to curb the high inflation rates, has increased loan rates 10 times in past one year which has dented the loan-based purchasers. Pawan Goenka, President of SIAM (Society of Indian Automobile Manufactures) said that the loan rates have changed heavily against what was expected by the industry. He added that a further increase will become dangerous for the auto industry.
Meanwhile in China, the fastest growing car market in the world, things are not far from different. Chinese market saw a growth rate of 33 per cent last year and this year the growth is expected to slow down after the government took back a huge chunk of incentives on offer. Industry observers do not have a clear view about how fast the Chinese market will grow in coming years but it is certain that the growth rate will be around 10 per cent per annum till 2015.
Still on an average, the car sales in China are much higher than India. China sells as many cars in a month equal to number of cars sold in India in a year. Despite having almost the similar population, China sold 13.8 million cars in 2010 compared to 1.9 million cars sold in India. Goenka said that the passenger car sales growth is expected to be around 11 per cent to 12 per cent compared to earlier predictions of 15 per cent to 16 per cent. He added that increased fuel rates and finance rates have dampen the growth of the Indian auto industry. Diesel and petrol rates in India have increased by 9 per cent within last two months only. Vineet Hetamasaria, auto analysis, PINC Research, said that in the past three months, sales have slowed down and with increasing loan rates, the situation is expected to remain the same for the next three months also.
Some of the popular hatchback models in the Indian auto market are Toyota Etios Liva, Ford Figo, Maruti Swift, Hyundai i10, Chevrolet Beat and Volkswagen Polo. Apart from these popular models, cars going to hit the Indian roads this year are Force One, Nissan Sunny, Maruti Cervo and Honda Brio.