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Car firms pin hope on festive fillip

New Delhi, Sept. 2: Car makers are cautiously optimistic about a turnaround in domestic demand during the festive season as they gear up to launch models.

"Latent demand is much higher and the industry is expected to grow 15-17 per cent this festive season," said Rakesh Shrivastava, vice-president (sales and marketing) of Hyundai Motor India, on the sidelines of a Society of Indian Automobile Manufacturers (Siam) event.

He said Hyundai was eyeing a 20 per cent growth in sales on the back of improved customer sentiment owing to low fuel price, lower interest rates and softening inflation.

Domestic car sales rose 17.5 per cent in July, the ninth consecutive monthly increase. Siam expects the industry to post a sales growth of 6-8 per cent in 2015-16. Sales grew 7.5 per cent to 875,000 units in April-July.

According to Siam president Vikram Kirloskar, the tide has turned for the industry and the three-year slowdown is finally getting over.

"August was the seventh consecutive month when auto sales were positive. The market sentiment is now changing. The monsoon has been better which definitely bodes well for the industry," he added.

However, he warned of speed breakers ahead that needed to be addressed, including high taxation that keeps a tight leash on growth. "The tax in this industry is as high as 84 per cent in some of the vehicle sector which is hampering the industry."

The Siam president called for stable policies, specially on emission norms, and said skipping Bharat Stage (BS) V and jumping straight to BS VI from BS IV would add extra burden on the industry and in turn customers.

Kirloskar said harmonisation with global safety and emission norms must be done keeping the local conditions in mind. He said once timelines for policies had been fixed, it should not be subjected to "knee jerk" reactions and change as it affected the entire supply chain as the industry worked on an integrated chain involving suppliers.

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