With the news that the Cabinet Committee on Political Affairs (CCPA) may take a decision on fuel price hike in the current week itself, carmakers have a dual problem at their hands.
It was just yesterday that the apex automotive body Society of Indian Automobile Manufacturers (SIAM) announced that in August car sales in India fell for the first time in 10 months, a drop of 19 per cent.
Senior executives at SIAM and from various vehicle making companies have clarified that the automobile sector in India is facing the worst times since 2009. The association had given a car growth forecast of 9-11 per cent for the current fiscal but yesterday said that the target looks difficult given the drop in sales.
Some manufacturers are even asking the government to come out with a stimulus package for the automotive industry like it did in 2008-09 where the industry witnessed a four percentage points fall in excise duty over a space of two packages.
P Balendran, vice president (corporate affairs), General Motors, said, "The market situation is really weak. If there is a further increase in price of petrol then market will move further into depression. We expected a 5-10 per cent increase in sales during the festive period now even that looks difficult. We are hoping that the government will come out with some sort of stimulus package like it did in 2008-09 which will boost demand which otherwise looks completely grim right now".
The only silver lining is the utility vehicles segment whose growth SIAM has revised to 11-13 per cent from 10-12 per cent earlier. This has been because of the robust demand for newly launched products like Maruti Suzuki Ertiga, Mahindra XUV500 and Renault Duster.
However, for long can these cars sustain the sales momentum needs to be seen as any new model in the market registers good sales numbers in the first few months because of the customers’ excitement.
An analyst tracking the automobile sector said that the looming fuel price hike is likely to dampen the sales further. He said, “The demand, as we see, is already falling and the fuel price hike will do nothing to better the situation.”
SIAM has said that if sales do not reverse the trend in September, which has kicked off the Hindu festive season, then the association will have to lower the fiscal sales target for the bindustry.