Inflation and tightening of key monetary policies have not been able to hard hit the Indian auto sector, which witnessed robust sales in the month of July  Maintaining the momentum of previous months, car sales in the country rose to 38% in July this year, and according to industry players the momentum is likely to sustain in the coming months as well, with the festive season round the corner, when demand for vehicles hits the peak. In this context, while speaking to a Machinist360 correspondent, Sugato Sen, senior director at the Society of Indian Automobile Manufacturers, opines, “General consumer sentiment is still positive and despite tightening of key monetary policies by the Reserve Bank of India, finance is not a problem for most consumers. The auto sector has not been hit hard by inflation either. Moreover, a slew of new launches such as Ford Figo, Chevolet Beat etc have also helped a great deal in maintaining growth in car sales.” Mr Sen also added that with the economy going strong, the auto sector is expected to witness further sales growth.Figures indicating high growth rates
A glance at the sales figures by major auto makers in the country reveal the dream run enjoyed by them in the month of July. While Maruti’s sales clocked a 29% growth in July, General Motors recorded a growth of 45% and Mahindra and Mahindra recorded a growth in sales by a little more than 24%. According to Rakesh Jha, proprietor of Deco World, a small-sized manufacturer of auto ancillary units in Kolkata, “With hike in prices of raw materials such as steel, aluminium, rubber etc, major auto makers in the country have hiked prices of vehicles citing an increase in input costs and implementation of Bharat Stage-IV norms. Anticipation of further hike in prices is luring consumers to place orders in advance, which is propelling sales of vehicles.”
Analysts also believe that focus of auto makers on rural parts of the country, which always had the potential to drive the growth of the sector, has helped a great deal in recording high sales. Rural India has turned lucrative for auto makers. Toyota Kirloskar Motor plans to sell around 40% of its cars in rural market this year. Increase in disposable income has also facilitated sales of vehicles.
Bottlenecks
However, there are few hurdles that automakers have to overcome in order to sustain sales growth. Topmost among this is capacity constraint, whereby suppliers are unable to supply critical auto parts resulting in long waiting periods. Industry experts believe that capacity constrains is bound to happen as Indian automobile market is one of the fastest growing markets in the world, next to China.
Apart from the aforementioned hurdle, another factor that is likely to plague the growth of the industry is labour unrest. For instance, in June 2010, Hyundai’s plant in Chennai felt the heat of labour unrest, which is again rearing its head afresh. In April, labour unrest hit Exide’s unit at Bawal, Haryana, whereas last year strike called by several auto ancillary units in Gurgaon-Manesar belt crippled production of auto makers. However, industry players are optimistic about robust production in the coming months and are looking forward to lure consumers with more value-added features in their existing product profile.
Arup Choudhury |
