Auto industry may feel heat until early FY13: Assocham

The auto industry may continue to face tough times till the first quarter of 2012-13 as firms are expected to hike car prices by up to 10%, resulting in reduced demand, a study has said.

"The hike in car prices would mainly be driven by high interest rates, rising raw material cost coupled with labour pangs," said the Assocham study.

The hike in product cost would lower car sales.

From January to November, car sales shrank 4% over the same period last year, Assocham Secretary General DS Rawat said.

The industry can hike prices as it has been giving huge discounts to woo customers and moderate sales this year, he added.

"Besides, global disturbances in the US, sovereign debt crisis in the Eurozone, sluggish economic growth in Japan and a slowing Chinese economy are other significant reasons due to which automakers in India have been finding it difficult to keep their margins intact," Rawat said.

The chamber interacted with nearly 50 experts from the industry, including leading automobile manufacturers, dealers, auto-parts traders and analysts across cities like Ahmedabad, Bangalore, Delhi-NCR, Mumbai and Pune.

The industry body suggested that automakers should revise their marketing strategies and launch diesel variants to tide over the tough times.

"Automakers must revise marketing strategies, launch diesel variants, promote easy availability of finance options to woo the customers and keep a tab on tier II, III cities to spurt the car sales in the recent future," Rawat added.