Rising fuel costs have added fuel to worries of the auto makers in India. Manufacturing costs had already escalated in past months due to rising steel prices and interest rates had also raised worried eye-brows about the car sales. Now the car industry in India is worried about the rising fuel prices. It feels that hike in fuel prices may cast an adverse short term effect on the car sales in the country.
Although most of the auto makers have reported higher sales in the month of May; however, the profits margins have sunk due to rising input costs. If the fuel prices keep on escalating, it may cast yet another dampening effect on the quarterly results.
"It is a very tough situation for us. As it is we are under tremendous pressure from rising input costs and high interest rates. Initially, in short-term it will have an impact on sales but in the long-term it will be taken into stride by consumers," Hyundai Motors India Senior Vice- President Marketing and Sales Arvind Saxena said.
On the other hand, this gives rise to new opportunities for the car makers to come up with more fuel efficient cars and cars that run on alternative resources. Currently, Indian market has only Reva as an electric car. Mitsubishi has also announced to bring its electric car to India.
