Fuel Hike and Rise in Duties Will Not Deter Growth in India

Indian automakers is very optimistic about the growth in Indian car market and feels that the rise in excise duty or price of fuel will not dent the market. In fact, 2010 is a year that everybody is looking forward to; manufacturers and consumers alike.

The government in the 2010-11 Budget had rolled back the excise duty and also increased the fuel prices thereby setting off an alarm that the dream sales run the car companies were having till February (most car companies posted record sales growth in Jan-Feb) might soon come to an end.

But car manufacturers do not think that this will dissuade the growth in India. “India’s auto sector has only taken off; in fact, in the months to come we are expecting the sales to grow. Only lately, Indian customers have been exposed to so many choices from the hatchback category to the premium cars. Indian automobile sector has just opened up, so we are looking at an exciting year ahead,” said Rajeev Kapoor, president and CEO, Fiat India.

He said that the launch of Fiat Punto Fire 1.2 has been done to cater to the growing B+ segment in India and that they are expecting the sales to go up in the next couple months. “We would be launching few more variants in the near future as we see a lot of potential in the Indian market,” he added.

The rise in excise duty of 2% has forced car makers to increase the price on their models from Rs 5000-7000. Volkswagen which launched its Polo before the Budget was announced has also undergone a price change. Since then Figo was launched and now Punto Fire, so there’s no stopping as of now.

Michael Boneham, president and managing director, Ford India during the launch of the Figo had said that the Indian car market is booming right now and so there is no reason why sales should go down, in fact, 2010 will be an exciting year as many cars are expected to hit Indian shores.
India and China are hotbeds and it here that the global car manufacturers have a huge expectation from. “When auto sector in all countries went down the slump during the recession, Indian market went flat and now when others coming back to a stable position we are on a high speed run. The pace at which car market is growing in India is incomparable,” said a Fiat spokesperson.

According to Rajiv Dube, president – Passenger Cars, Tata Motors, the purchase of a car in India is more emotional than price sensitive. “People who intend to buy a car might just delay his plans for a while but he wouldn’t cancel the same. So there is no slump that I feel will happen in the Indian market.”

The rise in the standard of living has surely leaded to more money in the hands of the middle class Indian and they are flaunting it.