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Auto sector pins hopes on festive season

Ramnath Subbu
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About 20 variants or new models are to hit the roads over the next few weeks

The automobile industry, which has been hit by poor sales due to depressed demand, is looking for a fillip from the festive season starting Monday to give an impetus to sales.

While the last few weeks already saw some big-ticket launches by major players such as Mahindra’s Quanto and Nissan’s Evalia, about 20 more variants or new models are to hit the roads over the next few weeks.

In the backdrop of worrying estimates put out last week by the Society of Indian Automobile Manufacturers (SIAM), which revised its auto industry sales growth to 5-7 per cent for 2012-13 from its earlier estimate of 9-11 per cent, a lot hinges on festive season sales.

“The current state of the industry is the reflection of many micro-economic indicators. The key market drivers like high interest rates and fuel prices have not displayed optimistic signs for the industry due to which the excitement in the market is low,” said Arvind Saxena, Managing Director, Volkswagen Passenger Cars, Volkswagen Group Sales India Pvt. Ltd.

Mahantesh Sabarad, Senior Vice-President, Equity Research, Fortune Equity Brokers, said, “The SIAM downgrade in estimates is a little harsh but companies have to think ahead. The number of launches has more to do with product life cycles which are typically 7-10 years and the need for refresh versions or new models.”

The new launches include the new Maruti Alto, Tata Safari Storme, Chevrolet’s new Spark, Sail and CN100 van, Ford’s new Figo and Honda’s Brio automatic. The premium launches include BMW’s new X1 and 3-series convertible, Audi A3, Porsche new 911 and Mercedes’ SLS Roadster.

Mr. Sabarad felt the new launches could play a part in reviving sales. “The price gap between petrol and diesel has narrowed so people could re-enter the market. Banks are also accelerating their lending portfolio with favourable rates and several of them have seen auto lending business shoot up,” he said.

“With the overall slowdown, buyers are looking for something new and companies are responding to that demand proactively,” said Surjit Arora, a sector analyst with Prabhudas Lilladher, a broking outfit.

Besides discounts, companies are promising quicker deliveries. Volkswagen is launching its luxury SUV, Touareg, and is offering the Refresh Polo and Vento. “During such times, it is essential to make the buying experience exciting for every customer and ensure that he feels his money has been well invested,” said Mr. Saxena.

Mr. Arora felt that auto companies had to make good this festive season, “if not, then April-December 2012 may turn out to be flattish despite the new launches.”


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