Car makers get ready for meaner times ahead

The car makers are gearing up to face the difficult times ahead. The manufacturers look forward to festival season hoping to witness the growth in their respective car sales. But this time, the festival season has failed to cheer the car makers. The season has brought an unusually sluggish growth in sales this time. The grim situation is expected to worsen with the RBI’s decision to increase the interest rates on loans which is supposed to come into effect any time soon. The volatile petrol prices are to saddle the consumers further. Despite offering exuberant discounts and many promotional events, the car manufacturers were unable to surge sales.

With majority of the Indian population depending on the financial institutions for purchasing a car, the high lending rates will prove to be a major setback. SIAM president S Sandilya had emphasized on the fact that the current slowdown had induced SIAM to revise its sales growth prediction for 2011 twice till date. The recent forecast now stands to be at 2-4% against the earlier growth prediction of 16-18% in April. The Business Head of HDFC Bank, Ashok Khanna had said that the recent hikes on the lending rates by the RBI are likely to be passed on the to the consumers sooner or later. The banks will not be able to tolerate the hike for a prolonged period of time bearing the encumbrance.

The RBI’s decision has come to combat the high inflation in the country. However, this will subdue the spirits of the car enthusiasts who will have to think twice before going ahead with the purchase. The RBI has engorged the interest rates numerous times in this year. Sandeep Singh, the Deputy MD of Toyota India and Sumit Sawhney, the Marketing Head of General Motors are brethren in saying that the usual positive sentiment is missing this year as compared to the last year. Even the leading car dealerships from top manufacturers have reported a decreased demand for cars this year.

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