How 2011 was for Cars in India

The year 2011 is a big one when it comes to car launches. In total 77 cars were launched this year here in India. A big chunk of that was no doubt accounted for by sub Rs. 20 lakh cars but the luxury car market was in a very strong stride as well. With the likes of Ferrari, Aston Martin, Maserati and other luxury car makers setting up shop in India the budget car market seems to have taken a back seat for new manufacturers to enter with Renault being the only car maker to enter India as a non-luxury car brand. As a result luxury cars account for a large number of new car launches in India.

Slowdown for bigwigs

With so many car launches one would expect the market to experience a boom. But in reality the scene is a little bit different. Maruti Suzuki, India’s biggest passenger car makers fell by 18.5% on a year-on-year basis. And it’s much the same with other car makers. The reasons for the fall in new car demand are the slowdown of the Indian economy, rising interest rates on car loans and soaring fuel prices. Indians thought they could escape the petrol price hike by going in for diesel cars.

However, as expected taxes were raised towards the end of the year on diesel cars making already pricey diesel cars even more expensive to provide balance between demand for petrol and diesel cars. In developed nations the ratio of petrol and diesel cars on the road are about 50:50 and it is but natural that our government would like to strike a similar balance on our roads to maintain demand and supply of both fuels. As a result car makers like Maruti Suzuki and Hyundai who were planning on expanding their infrastructure to produce more diesel cars backed by rising demand have put their plans on hold to expand their infrastructure to ramp up diesel car production.  

Petrol v/s diesel

In order to minimise the fall in sales figures on a year-on-year basis car companies are offering attractive discounts and sales initiatives as we speak to raise the number of new car sales. Keeping in mind the current economic scenario and the rupee depreciating new car prices are going to shoot up further from January 2012 onwards. To top it all the Minister of State for Petroleum, R.P.N Singh has addressed the nation by saying that diesel prices will not be deregulated but that we should ‘get used’ to fluctuation in petrol prices as a result of the fluctuating value of the Rupee. 

All these reasons have made new car buyers uncertain about by a new car. However, certain select models of popular cars, especially diesel cars have experienced demand from customers that begin from the reception desk and stretch around the next block. For example the Maruti Suzuki Swift diesel has a waiting period of eight months at present but the petrol version has a waiting period of roughly just a month. The super successful launch of the Mahindra XUV500 saw bookings for the car close down due to excess demand for the car. 

Big-spending boom

At the other end of the scale luxury cars saw a huge rise in demand. This is down to the fact that people who buy these vehicles can at this point of time overcome inflation, rising interest rates and fuel costs. The year 2011 saw luxury car sales grow by a staggering 50% despite the economic downturn. But experts predict that in the near future economic concerns will manage to dent that growth to an extent. This is primarily down to the fact that a lot of entry level luxury cars which account for significant sales numbers are acquired through car loans and the budget end of the luxury car market will see a slowdown in bookings. 

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The used-car market

Then there is the used car market which is seeing an increased trend towards purchase of used cars from branded used car outlets such as Mahindra First Choice, Maruti True Value, Hyundai Advantage and others. Even luxury car makers like BMW have setup their in-house used car outlet to deal in used BMWs backed by growing demand for used luxury cars. Expect more such used car outlets from different manufacturers in future. The best advantage of these outlets is peace of mind while buying a used car.

Talking shop

On the industry front various conferences and seminars such as the Diesel Emissions Conference 2011, India and the Safety Convention 2011 were held to establish some sort of a yardstick for vehicles sold in India. The Diesel Emissions Conference discussed the possibility of making Euro IV diesel fuel available throughout the country so that Euro IV diesel engines can be made mandatory on new vehicles to reduce pollution. Vehicle scrappage schemes were also discussed to scrap diesel vehicle older than 10 years to reduce emissions from diesel vehicles. Establishing Euro V emissions norms in the country with the availability of AdBlue were also discussed to cut emissions.

The Safety Convention 2011 discussed the possibilities of building safer roads and vehicles to reduce the number of accident fatalities. The Safety Convention concluded with the wait for an NCAP version for India to be put into place by 2014 or 2015 which will require all new cars sold in India to meet certain safety norms. 

F1 fever

Motorsports in India received a big stimulus with the Inaugural Indian GP in Noida. We should see many race series from across the world plan out a yearly schedule to make an impact in India. As a result of which we shall hopefully see car makers in India offer more performance oriented products. 

Wrapping it up

All in all it was a mixed year for automobiles in India with all ends of the passenger car market growing in terms of product range but sales figures taking a blow due to various economic factors.