Car makers in India continue to play the role of mere spectators as they expect the sales to slow down further, owing to the biggest ever hike of Rs. 5 a litre in petrol prices, with nothing much in their control. The companies were already paying for the damage being done by high interest rates on auto loans and with the recent trend emerging out of the blue, the condition will become more critical.
Society of Indian Automobile Manufacturers (SIAM) Director General, Vishnu Mathur said that they have already observed a decline in the passenger car growth last month, due to sky-scraping interest rates and hike in commodity prices. He also stated that the demand will be suppressed further, particularly because of rise in petrol prices.
In April 2011, sales of cars in India registered the slowest growth rate in 22 months and were struggling at 13.18 per cent, primarily due to rising interest rates and diminishing consumer confidence.
Maruti Suzuki India Limited Chief General Manager, Marketing, Shashank Srivastava said that in the coming time, petrol cars, along with the auto industry will bear the brunt of plunging petrol prices. Hyundai Motor India Ltd. (HMIL) echoed its close rival Maruti saying that there will be a possible impact on car sales; however, it may not be that grave.
According to Hyundai Motors India Limited Director, Marketing and Sales, Arvind Saxena, an increase of Rs. 5/litre of petrol is a considerable hike. The sudden burgeoning is ought to affect the sales of cars, although not so severe. Volkswagen Group Sales India Pvt Ltd Member of Board, Neeraj Garg said that it is going to keep the customers away from car showrooms, at least for some time, mainly because of the psychological effect. He also reported that there will be a dip in demand for the next one to two months.
General Motors India Vice-President P. Balendran said petrol price increase is "definitely a dampener" and the number of people visiting car showrooms will come down drastically in the near future.
Srivastava of MSIL also said that at the time of fuel price increase, the market usually gets back on track after some time; however the latest hike may be more meddlesome as "it may be too much for consumers sometime".
Thus, high inflation in recent times has restricted the spending of the consumers, with hike in petrol prices further subjugating the economy as a whole.
