Auto Cos' review expansion plans

The Society of Indian Automobile Manufacturers (Siam) has expressed its concern that the Indian auto market may witness a fall in any new investments other than those already planned. Primary reasons it has quoted are that the demand in market has slowed down and it has hit car sales in India. Reason behind such a downslide or low figure of car sales in India are fuel price hike and increasing rates of automobile finance due to high inflation rates.

Mr. Pawan Goenka, the president of Society of Indian Automobile Manufacturers (Siam) reportedly said that a wait and watch approach is being practiced by the automobile companies and they are rethinking each business related step cautiously. Thus, a halt is expected for sometime as the companies are reviewing their expansion plans.

Reports also suggest that the inflation rates are fuming day by day in spite of several measures and efforts by the Government to curb inflation. A nine percent or less gain has been recorded for the automobile passenger car segment in the first three months of this year. And in last 27 months it faced a growth of less than 1.62 percent only. Reports also infer that the revised increment in the rates by the Reserve Bank of India has created instability in the country's financial approach which has only retarded the growth of the Indian car market.

Mahindra and Mahindra has also reviewed investments on the Chakan Production unit in Pune and has condemned the state government's decision to remove the value-added tax (VAT) for Mahindra and Mahindra cars marketed outside Maharashtra which actually contributes 12.5 per cant tax for approximately 70 per cent of cars of M&M.

However, some expansion plans which were decided earlier are on track, still companies are rethinking twice before making proposals of further investments. Ford India has planned up a vehicle and engine manufacturing plant in Gujarat and Toyota Kirloskar is increasing its production capacity in its Bangalore plant. They came up with a proposal of Rs 5,000 crore into their new activities. The new unit at Manesar plant of Maruti Suzuki is also on its way of accomplishment and may open the deal for workability during September or November as previously announced. Maruti Suzuki has met a 3 per cent growth in first three months of the present year.