Carmakers see India sales slowdown "temporary"

NEW DELHI Thu Jan 5, 2012 1:03pm IST

1 of 4. Bollywood actor Ranbir Kapoor (2nd L) and Gilles Normand (L), Corporate Vice President, Africa, Middle East and India (AMI) of Nissan Motor Co pose after unveiling of the company's new Evalia car at India's Auto Expo in New Delhi January 5, 2012.

Credit: Reuters/Adnan Abidi

Related Topics

Stocks

   

NEW DELHI (Reuters) - A slowdown in car sales in India is seen as a passing phase and automakers expect demand to pick up once high interest rates start easing and growth in Asia's third-largest economy bounces back.

However, it will take some time to get back to the double-digit growth, top carmakers said at the 2012 Delhi Auto Expo that began on Thursday.

"The slowdown in the market today is short term and temporary," said Shinzo Nakanishi, chief executive and managing director of Maruti Suzuki, the country's largest car maker.

Rival Hyundai Motor Co expects growth to pick up in the second half of 2012.

"Today everyone is expecting interest rates would soften so they are also holding on their decisions," Arvind Saxena, director for sales and marketing at the Indian unit of South Korea's Hyundai Motor told reporters.

"In the next six months the economy hopefully should do slightly better than what we are doing today, which will also improve the sentiment in the market," he said.

India's car sales, which grew 30 percent in the year that ended in March 2011, are expected to be flat in the current financial year, an industry body said last month, as high interest rates and rising input costs bite.

Total sales for the first eight months of this fiscal year are down 3.5 percent from a year earlier. Rising prices of fuel and materials such as steel, aluminium, plastics and rubber have pushed up costs and dented demand.

Maruti's 2012/13 sales are expected to be better compared with 2011/12 as possible cooling of inflation is likely to lead to lower interest rates, said Mayank Pareek, head of marketing and sales, but added: "double-digit growth, we are still away."

The company, 54.2 percent owned by Japan's Suzuki Motor Corp (7269.T), has seen sales slump after labour unrest last summer hit production at its plants for some months in 2011 and resulted in $500 million of lost production.

A year ago, Maruti accounted for every other car sold in India, but local rivals Mahindra & Mahindra and Tata Motors have since boosted their market share.

Hyundai's Indian unit, which posted a 4.8 percent increase in domestic sales in 2011, expects single-digit growth for the Indian car market in 2012, Saxena said.

For the Expo minisite, click here

(Writing by Prashant Mehra; Editing by Ranjit Gangadharan)

FILED UNDER:

Surprise Rate Cut

Reuters Showcase

Insurance Bill

Insurance Bill

Opposition support bolsters prospects for insurance reforms  Full Article 

SBI Share Sale

SBI Share Sale

SBI's up to $2.4 billion share sale likely by end April - sources   Full Article 

Eicher Share Sale

Eicher Share Sale

Truck maker Volvo sells shares in Eicher Motors  Full Article 

Beef Ban

Beef Ban

After beef ban, Hindu groups force abattoirs to close   Full Article 

Monsoon Season

Monsoon Season

Exclusive - India expects better monsoon rains this year  Full Article 

Services Growth

Services Growth

Services growth at eight-month high in Feb - HSBC PMI  Full Article 

'India's Daughter'

'India's Daughter'

Documentary on 2012 Delhi gang rape banned in India  Full Article 

Capex Slashed

Capex Slashed

Cairn India slashes 2015-16 capex on falling crude   Full Article 

Strong Start

Strong Start

Airwaves auction off to strong start, bids near $10 billion.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage