Indian automobile industry may feel the heat until the initial months of financial year 2012-2013. A study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) states that this is likely to happen owing to the reduction in demand of cars, primarily because of the increase in prices. The automobile companies are expected to soon increase the prices by up to 10 per cent.
The ASSOCHAM study mentions that “The hike in car prices would mainly be driven by high interest rates, rising raw material cost coupled with labour pangs". Commenting on the issues, ASSOCHAM Secretary General D. S. Rawat stated that there was over 4 per cent decrease in sales of cars between January and November, in comparison to the same period last year.
Apart from reasons like high interest rates and production cost that led to the adverse sales figures this year, there were other factors as well. D. S. Rawat commented that “Besides, global disturbances in the US, sovereign debt crisis in the Euro zone, sluggish economic growth in Japan and a slowing Chinese economy are other significant reasons due to which automakers in India have been finding it difficult to keep their margins intact.”
For the study, ASSOCHAM collaborated with around 50 industry experts, which included renowned manufacturers, established dealers, along with auto-parts traders and analysts. For getting the true picture the study was done across various cities, including Delhi-NCR, Ahmedabad, Bengaluru, Mumbai and Pune.
To overcome the bad time that the industry is facing, the chamber suggested that the companies should come up with better marketing strategies and also focus on diesel variants rather than petrol cars. Rawat stated that "Automakers must revise marketing strategies, launch diesel variants, promote easy availability of finance options to woo the customers and keep a tab on tier II, III cities to spurt the car sales in the recent future."
Though the industry may have to face tough times ahead, it can take few precautionary measures to lessen its burden.
