Fitch Ratings expects Auto sector to grow by 10-12 per cent in 2010

According to the Fitch Ratings, 2010 will be a good year for Indian auto industry as the industry is likely to see a growth of 10-12 per cent in sales. But as the competition increases with the new players entering the Indian small car market, companies will come under margin pressures. With the increasing competition Suzuki India (MSI) and Hyundai Motor India (HMIL), leaders in their respective segments will face challenge to their position. Fitch in its report 'Indian Auto Sector Outlook' reported that it expected the overall Indian auto sector to witness an overall growth in sales of 10-12 per cent during 2010.

The report also stated that increasing penetration of global original equipment manufacturers (OEM) is likely to increase the competition in the country's auto sector. It said that many international OEMs were coming in either independently or in collaboration with existing players with the objective of reducing time to market and to take advantage of an established distribution network. The report further added that the competitive intensity would increase due to the increase in number of new players as well as the increased number of new product launches from existing players. This competition could lead to increased price competition and consequently margin pressures

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