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Expect relentless car launches, and delayed wonder Nano

It was supposed to be one of the best years for the domestic automotive industry but 2008 turned out to be the worst.

autos Updated: Dec 22, 2008 20:45 IST
Sumant Banerji

It was supposed to be one of the best years for the domestic automotive industry but 2008 turned out to be the worst. And with the full impact of demand downturn starting to pronounce itself only now, 2009 or at least part of it could be forgettable for the industry.

With the launch of Nano in Auto Expo 2008, the year began with a bang, with the eyes of the world’s automakers and consumers alike on the $2,500 auto wonder. But as the year wore on, the echoes of the bang faded to just a whimper by the end of it all.

Cars
Passenger car sales started on a strong note, helped very early on with the 4 per cent excise duty cut on small cars. That was something even the industry was not expecting and so was the growth that followed. In the first three months of fiscal 2008-09, car sales were galloping at over 15 per cent.

In barely two months, the uptrend reversed and as loans dried up, sales fell. Caught unawares, inventories piled up and a torrid festive season turned into a slowdown. By November, car sales were almost flat over last year.

With bearish sentiments still running high, nobody expects 2009 to be a success. There will be launches galore — no less
than 20 and none bigger than Nano which would come in limited quantities between Jan-March — but even that may not catapult sales to the next level.

“A moderate improvement in the outlook for the automobile sector in 2009-10 hinges on financing rates remaining stable and continuation of the industrial investment cycle,” said Sachin Mathur, Head, CRISIL Research.

The slowdown in the economy almost immediately hit sales of trucks and buses. From a growth of 10 per cent in April-June 2008, it reversed to an almost 10 per cent decline for April-November 2008. Market leaders Tata Motors and Ashok Leyland bore the brunt of the slowdown, announcing multiple plant block closures and production cuts.

“It is rare for all three segments — cars, 2-wheelers and commercial vehicles — to slide at the same time,” said S.P. Shah, president, Federation of Automobile Dealers’ Association. “There is not likely to be any revival for the commercial vehicle sector as it will take time for the overall economy to improve.”