Sales slowdown: What industry leaders have to say
There is an urgent need to come out with an integrated incentive-based scrappage policy covering all segments of the auto industry as promised by the Hon'ble Finance Minister. As the festival season is around the corner, it is imperative that these decisions are taken quickly and announced without delay so that the industry could hope for a better festival season that could harbinger a recovery in the industry.
There is no demand and no private investment, so where will growth come from? It doesn’t fall from the heavens. The auto industry is going through a very difficult period. Cars, commercial vehicles and two-wheelers are going through a rough patch.
Most of the automobile slowdown is the industry's own making. Lots of companies are not able to export because, by world standards, their products are mediocre. I don't want to name them. But when you are making everything -scooters, bikes, cars, jeeps, SUVs, trucks and buses, you are obviously not going to be world-class at anything.
There is no point pushing stocks in the dealerships when there is no demand in the market. We will take a call regarding production after taking a look at the market situation. We have an inventory of a little over a month with our dealers since retail sales are under pressure.
The automobile industry supports the steel, chemicals, textiles and other sectors as well, and any slowdown will impact the broader economy. Demand in the rural market has also declined significantly and the double-digit drop in motorcycle sales is an indication of the demand situation in rural areas.
A few factors that have increased the car costs are: transition to BS-VI, road tax by state governments, the SC order to buy three-year insurance cover and the increase in interest rates for customers. The result is an increase in the on-road price of a car by as much as 10 per cent. What compounded the price increase further is the financial crisis. Dealer finance came down, while finance rates have gone up for customers.
Depreciating rupee has very strong impact on sentiments. People often take money out of investments in share prices to buy a car and now that's not happening because prices are depressed. The rural spend has also not really picked up. This has an effect on buying. So, in all I would say financing, transaction cost and overall sentiment of consumers is cumulatively making it hard.
There is some industry slowdown. We believe that the slowdown in the automobile industry is temporary. Customer sentiments will revive again.
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