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Smooth road ahead for auto industry

The Indian auto industry hopes the New Year will usher in good times again with some tax cuts, economic revival and better sentiments after a year marked by low volumes and labour unrest at some units. ‘It has been a dull and lacklustre year for the auto sector,’ said V.G. Ramakrishnan, senior director (South Asia, Middle East and North Africa) for automotive practice at consultancy firm Frost and Sullivan.

‘But some segments like utility, light and small commercial vehicles grew. The car segment did not grow significantly while two-wheeler makers managed to log growth,’ Ramakrishnan told IANS. The economic slowdown resulted in lower freight, forcing truck operators to stick to their existing fleet and thereby bringing down the sales of medium and heavy trucks while light and small trucks showed growth, Ramakrishnan added.

According to the Society for Indian Automobile Manufacturers (SIAM), cumulative production growth during April-November was just 4.8 percent over same period last year. The industry produced 1,646,495 vehicles in November 2012 as against 1,816,977 in November 2011, a decline of over nine per cent. In 2011-12, the industry had produced 20,366,432 vehicles of which the share of two-wheelers, passenger vehicles, three-wheelers and commercial vehicles was 76 per cent, 15 per cent, 4 percent and 4 per cent, respectively. Yaresh Kothari, research analyst at Angel Broking, told IANS that the mining ban in some states like Karnataka and Goa also affected truck sales. ‘Overall sales of medium and heavy trucks came down by around 15 percent,’ he said.

Kothari said that the demand for two-wheelers was also sluggish owing to high fuel costs and that lower-powered motorcycles are registering better growth than high-powered ones. Out of 16 car manufacturers, nine companies reported decreased production, three reported marginal growth (less than four percent) and only four have been doing well this fiscal, as per figures available with the auto industry. Carmakers Nissan Motor, Toyota Kirloskar, Honda Cars India, Hyundai Motor, Maruti Suzuki, Renault India and Skoda Auto are seven companies that have posted growth during April-November 2012. ‘It has been a mixed bag. We saw a number of new model launches and aggressive pricing from various automotive manufacturers,’ Takayuki Ishida, managing director and chief executive of Nissan Motor India, told IANS. ‘There are many variables that caused the slowdown, including inflation, interest rates and fuel price increase. The consumer sentiment continued to be down even during the festival season,’ he said.

According to P Balendran, vice president at General Motors India, the entry-level gasoline cars have been hit the hardest, showing a decline in the growth rate. There was also talk of additional diesel tax which caused a lot of uncertainties in business and investments plans.
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