A vast majority of CEOs hold that Tata has given a stiff challenge to two-wheeler manufactures, whose market size could shrink as a result of the launch
About 20% price cut is expected in two-wheeler segment with launch of Tata-Nano and its another positive fall out as indicated in a survey by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) would be that banks loan exposure to four-wheeler industry would go up by 25% from October 2008 onwards after Nano cars roll down on roads with prices of second hand cars falling by 35%.
The survey in which 250 CEOs, having affiliations with the ASSOCHAM views were obtained on fall out of Peoples Car, 80% of them unanimously felt that with launch of Tata-Nano, India has become a member of Car creation club and no longer remains as its lead manufacture.
The 200 CEOs that those who held this view also sought that just as TATAs sacrificed their profits element in the Chotti Car, the government should waive off 12.5% VAT on it in public interest.
A Vast majority of CEOs also held that TATAs have given a stiff challenge to two-wheeler manufactures, whose market size would not shrink to a large extent as result of launch of Chotti Car and thus be forced to innovate new technologies to make motorbike and scooter as a result of which, there prices are anticipated to go down by 20%, to help them their market size.As regards to second hand cars sale, it is expected that it would fall by a minimum of 35%.
Releasing the survey, the ASSOCHAM President, Venugopal N. Dhoot said that going by popularity of TATA-Nanolaunch, over 75% CEOs expect that banks loans for car sector would register an increase by nearly 25% as four wheelers segment is going to create immense competition since many more players have expressed their intentions to make budgeted cars for which people have been keenly waiting for.
As per ASSOCHAM estimates, currently less than 10% of total banks loan exposure is restricted to four wheelers segment, maximum being the construction and real estate sector which in percentage terms is measured around 26%, said Dhoot.
About 60% of respondents felt that the negative fall out of TATA-Nano car launch would be felt most by autos manufactures and those that encourage sales of old and prototype cars as their presence on roads would fizzle out at an accelerated pace.
Nearly 70% of respondents felt that in metros and larger towns, the current market size of budgeted car manufactures would witnessed a major reversal and TATAs- Nano car would capture the largest market size, which can be over 50% in next 3.5 years after this car comes into the market sometimes in the month of October this year.
A good percentage of respondents, however, warned that congestion on roads would multiply which will put pressures on governments for improving the existing road networks to the extent that India would have to put up multistoried roads on lines of Japan and other economies of scale to accommodate the growth in automobile sector, said Mr. Dhoot.
Nearly 25% of respondents, however, felt that the two-wheelers market said that two-wheeler market in India has already shrunk to about 15.50 lakh units by November 07 as compared to little over 19 lakh units about a year ago which will further witness a decline since consumers henceforth would have many options in the four-wheeler segment with little price difference.
The survey also found that 5 years ago, their was a craze among youths be it in metros and semi-urban for two-wheelers which spurred up their demand.However, the situations have now changed and the craze would be shifting towards four wheelers particularly when these are available at a price around Rs.1 lakh.
Income levels in semi-urban and metros are rising and consumers are turning more comfort oriented and willing to scarify their earnings for convenience and comforts, felt 80% of respondents
The Chamber has also recorded that most scooters and mopeds launched over the past year have met with a poor response from buyers and this has further strengthen the claims of pessimists.Experts in the field are also sceptical of the higher engine-capacity motorcycles that have entered the cost-sensitive Indian market.
