Automakers set for bumpy ride

Mumbai: Has the smooth ride for India’s automakers ended this fiscal and beyond? It looks like so as the economic slowdown that kicked in 15 months ago, and rising fuel prices are expected to take sheen off their sales in near to medium term.

Policy uncertainty arising out of the Modi government’s ill-advised eagerness to embrace electric mobility without proper ecosystem being in place is also likely to have an adverse impact on the sector.

The other possible reason for the sluggishness in sales in the coming months is the fact that festive season had come early this year and would pass off post Diwali.

“The auto industry emerged from the shadows of the demonetisation and posted a healthy growth of about nine per cent in the first half of the current financial year. As the festive season coming to a close and economy is in a slow lane, we can’t expect robust sales in the second half,” an industry insider told The Hans India.

Abhay Firodia, president, Society of Indian Automobile Manufacturers (SIAM), also expressed his concerns over the declining economic growth and policy uncertainties recently, saying they would adversely impact the automotive industry.

India’s GDP was down to a three-year low of 5.7 per cent in the first quarter of the current fiscal while petrol and diesel prices reached a three-year high despite global crude prices being at historic low levels.

However, Rajan Wadhera, president, Automotive Sector, Mahindra & Mahindra, feels that sales growth will continue in the second half as well, as it will come on a low base last year.

“Automobile sales were hit hard by the demonetisation exercise taken up in November last year. Therefore, the sales base was low in the second half of last year. In this context, there will be decent growth this year. But you never know,” Wadhera told The Hans India here. He said replacement market would drive the growth as customers were keen to upgrade to BS IV models.

By P Madhusudhan Reddy