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Is The Auto Industry Slowing Down?

by Vikram Gour Photos: Thinkstock Posted on 16 Jan 201316,795 Views5 Comments

In the first three quarters of Financial Year 2012 the auto industry has witnessed a slowdown in terms of the overall growth rate, however the outlook for FY 2013 looks positive and has the potential to swing the industry back into gear

Two-wheeler industry growth

 

 

Even the moped industry did marginally better than motorcycles and posted a 1.80 per cent growth! The main cause of the slowdown amongst two wheeler buyers can be attributed to the steep rise in ownership cost thanks to the severe hikes in petrol pricing. Never the less, the outlook for 2013 is better as the market is showing signs of stabilizing and there are a slew of new launches planned which should provide the impetus to boost growth across all two wheeler segments.

 

There is no doubting the fact that the outlook of the industry, based on the performance in FY2012 so far has shown signs for everyone to sit up and be rather concerned, however it is important to understand that a lot of this turmoil is the result of numerous factors including stalled investments due to governance issues, lackluster interest amongst businesses which has been further fueled by the depreciation of the Rupee against the Dollar. Secondly, the Government has been slow to react and the decisions haven’t truly been in line with what the industry required to boost growth.  While governance remains a concern, the good news however is that the industry isn’t just sitting idle.

 

 

 

New Skoda Octavia

 

 

 

Opportunity exists, even in dire times, and that seems to be the mantra right now. Across the two and four wheeler segments we can expect to see over 70 product launches and this number might go higher if we include the introduction of new variants as well. Secondly, the debate on fuel prices seems to be attended to at the moment and finally, despite the domestic scenario, India is expected to post an economic growth between 5-6 per cent in 2012-13. It’s lower than before but looking at the global market, which is expected to report only a 3-3.3 per cent growth for the same period, India still stands on a reasonably strong economy which just needs the right impetus for major industries like the auto sector to prosper.

 

A lot depends on immediate governance decisions, however from an industry perspective, there is no better way than kick-starting the sales charts than by offering new launches. It is a bit of a long shot, however should the market gather momentum through these new launches, 2013 just might end on a positive note despite what the trade pundits state.

 

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