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Auto Industry Fears Slump Due To Fuel Price Hike
Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur said that they have already observed reduction in passenger car growth last month due to higher interest rates and hike in commodity prices. Demand will further be impacted, mainly on short-term with petrol prices going up (fuel price increase).
In April 2011, car sales in India posted the slowest growth rate in 22 months at 13.18 per cent, mainly due to rising interest rates and declining consumer confidence.
MSI Chief General Manager (Marketing) Shashank Srivastava said that at some point of time, there will be a big negative impact on petrol cars (due to petrol price rise) as well as the overall industry, because diesel prices are also rising. Rival Hyundai Motor India Ltd (HMIL) said there will be impact on car sales, although it may not be a massive one.
HMIL Director (Marketing and Sales) Arvind Saxena said that an increase of Rs 5 in per litre of petrol is a substantial hike. It will surely have some impact but it may not be a big impact. Volkswagen Group Sales India Pvt Ltd Member of Board Neeraj Garg said that it is going to keep the customers away from purchasing cars in the short term mainly because of the psychological impact. There will be a dip in demand for the next one to two months.
Further, General Motors India Vice-President P Balendran said petrol price increase is "definitely a dampener" and footfalls in car showrooms will come down considerably in the near future.
MSI's Srivastava said that when there is a fuel price increase, usually the market rebounds after some time however now it has to be seen how it reacts as "it may be too much for consumers sometime". High inflation in recent times has made consumers with less spending power, although disposable income may have gone up in the last few years.
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