Indian auto sector largely reflected economic situation of the country in 2013. like economic remained subdued so was the case with auto companies. While industry witnessed record spell of decline in sales, vehicle recalls and strikes, it also found silver lining in the form of rural markets which could and would help automobile companies stay afloat in the years to come.
like India has all the necessary resources and appetite to be one among the fastest in the world but for policy paralysis, so is the case with car companies in the current scenario. They have capacities and products to allure customers but buyers unsure of their future, choose not to buy cars, leading to not only underutilisation of capacities but also high inventory at the dealer level.
While this year showed that new and exciting models do lure customers, it also showed next growth is to come from rural India as urban market is either stagnant or declining.
“Rural market has become a life-saver for us. We have been working in rural India for the past 4-5 years continuously because we knew next growth would come from here only. While urban market is either stagnant or declining, rural market has been growing during this financial year at 18 per cent. Rural sales contributed about 30 per cent of our total sales in the April-November period this fiscal,” said Maruti Suzuki Chairman RC Bhargava.
“In the next four months this 30 per cent will go up to may be 32 per cent. But, the urban markets are not going up,” added Bhargava while admitting he did not find any signs of revival in passenger vehicle sales.
Bhargava admitted that had it not been the rural market, the company would have had an even tougher time and would have been in similar mess like the rest of the industry as demand in urban areas has slowed down by 5-6 per cent.
Some of the auto companies launched exciting products at competitive pricing to beat the ongoing slowdown and they did come out of blues. Honda was able to surprise Indian customers with its sedan ‘Amaze’ and Ford was able to impress customers with its sports utility vehicle ‘EcoSport’. Both the products turned out to be the best seller for their respective companies.
The year also saw one of the biggest recalls by any carmaker in India. General Motors recalled 1.4 lakh units of its multi purpose vehicle Tavera, manufactured between 2005 and 2013, to address emissions and specification issues. Ford India recalled 972 units of the diesel variants of its newly launched EcoSport to rectify the engine problem. Earlier in the year, Toyota recalled a select lot of its premium sedan Corolla, made between January-June 2003 and sold in India as part of a global recall of 17.3 lakh vehicles to rectify defective airbags. Maruti Suzuki India (MSI) also recalled 1,492 units of Ertiga, Swift, Dzire and A-Star models produced in October this year to rectify a possible problem with steering column.
In the longest period of slowdown witnessed by the Indian auto market, car sales dropped continuously for nine months till July this year. It recovered for two months in August and September around the festive season before falling again in October and November. In the January-November period, car sales in India had fallen by 10.32 per cent to 16,74,450 units as against 18,67,176 units in the same period last year. Besides cars, the commercial vehicles segment was also badly battered with economic activities such as mining and infrastructure projects came to a near halt.
Extreme downturn forced umbrella body of automobile companies SIAM to seek stimulus package for the sector from the Government but there is still no response. Although the festival season did bring some cheer in terms of sale and September, recorded the highest level during the fiscal, RBI’s decision to hike short term lending rate impacted interest rates on car and automobile loans thus adversely affecting the sales further.
With slowing sales, manufacturers were left with no option but to curtail their production capacities and undertake unplanned temporary plant closures. For instance, Maruti Suzuki India (MSI) undertook a one-day production cut at its Gurgaon plant in March. It again had to take a similar one-day production shutdown in June at its Gurgaon and Manesar plants.
Similarly, M&M shut down its tractor plants at Jaipur and Rudrapur for five days and two days, respectively, due to inventory pile up amidst falling sales. It also stopped production at its automotive plants for up to eight days in July and announced in August that it would stop production at its factories in the following months.
While the current year is not so exciting for most of the car companies, the new year is expected to be quite exciting for car lovers as lot of new products are waiting in the wings. They are — Honda City diesel, Mercedes S class Hyundai’s Grand i10, Datsun’s GO, Honda’s MUV Mobilio, Audi’s A3 sedan, Chrysler Jeep, Skoda Superb, Maruti SX4, Tata Nano diesel and many more.
last but not least, car lovers will have Auto Expo happening in February next year. Auto Expo 2014 will be held at a new location, India Expo Mart, Greater Noida and will showcase a multitude of cars from global and domestic market under one roof. The auto fiesta will begin from 7th February.