Auto makers pin hopes on festive season despite the prolonged slump

Tuesday 17 September 2013, 10:33 AM by

The slump in the Indian car market is a burning issue that is being discussed by everyone related to the industry. Things have been shaping pretty badly for auto makers operating in India in the past few months as the industry has been witnessing a terrible slowdown and consequently, low sales figures. Companies throughout the country have been trying to figure out new methods to counter this kind of problem. Even though the car market managed to reach the positive territory in the month of August, the figures can be quite misleading.

According to statistics, sales in the Indian domestic car market grew by over 15 per cent in August as compared to the same period in 2012. However, these figures do not project any sort of real growth as it is mainly due to the growth of Maruti Suzuki, which again has a loophole. In the month of August in 2012, Maruti Suzuki had to suffer from a production shutdown due to the violence that took place at its Manesar plant, causing the death of a senior executive. It is a known fact that Maruti Suzuki has a market share in the region of 30 to 40 per cent in the passenger car segment, thereby having a direct influence on the overall figures.

The Deputy Director General of industry body Society of Indian Automobile Manufacturers (SIAM), Sugato Sen, confirmed this fact in a recent interview. "This (growth) is not a reflection of the market conditions. This is mainly due to Maruti Suzuki India Ltd's numbers compared to last year. The tough market conditions still remain. Interest rates are high, fuel prices continue to be high while sentiments are extremely low," he was quoted as saying.

Despite all of this, auto makers are hoping for better times in the future and have pinned a lot of hopes on the upcoming festive season, which is about to commence soon. Over the years, statistics and reports have suggested that the festive season is the best time to launch a new car in India, something that a lot of companies follow. This year’s festive season can be termed as both highly anticipated and unanticipated at the same time. On one hand, car makers throughout the country are hoping for it to change circumstances and boost their sales. To be in the hunt for high revenue, automotive firms are going to introduce a number of new vehicles. On the other hand, sources have claimed that buyers are highly reluctant to purchase a new car due to high interest rates along with the increase in the price of products and fuel. Industry experts feel that the festive season is going to be the last hope of the auto market in this fiscal year. If firms are not able to record good sales in the upcoming festive season, it might have severe repercussions on the profit margins.

Nissan, the Japanese car maker, is gearing up for the launch of its compact Sports Utility Vehicle (SUV), the Terrano, which is the cousin of Renault Duster. Analysts have claimed that given the kind of success the EcoSport has achieved, the Terrano could outperform any other vehicle due to its aggressive styling. It is a highly anticipated launch as Nissan is moving aggressively in the Indian car market. Another car that has created waves much before being launched is the new Skoda Octavia, which might be introduced in the month of October. Czech-based auto maker Skoda is pinning a lot of hopes to this executive sedan, which has received acclaim for its stylish appearance and interiors. Said to be the best among all generations of the car, this Octavia was unveiled in Mumbai during the month of August, where it managed to turn a few heads.

Although several new launches are set to take place, experts feel it is highly unlikely that a massive turnaround could take place. Analysts have spoken about this fact several time, saying that the performance would be better but only slightly, thereby not affecting the overall position by much. "In August auto volumes grew 7.5% year-on-year (yoy), the first time in seven months. However, except passenger cars and two-wheelers, all other segments experienced a drop in sales from August 2012. We expect the near-term demand weakness to continue through September, while the festival season is likely to lead only to a month-over-month recovery," said auto analyst Rohan Kurde, who works for a research firm.

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