The domestic automobile industry got off to a bad start in 2014 with all major car manufacturers reporting a decline in sales in January over the same period last year.
After a bleak festive season that almost stagnated the market, the industry is now hoping that the Auto Expo this week, which will see around 70 new launches, will inject some excitement into the market.
“The first month of 2014 did not witness any improvement in the overall industry performance and the situation remains subdued,” said Pravin Shah, chief executive, automotive division, Mahindra & Mahindra Ltd. “The recent repo rate hike will in coming months escalate the rate of interest on car loans, impacting consumer sentiment. We hope the upcoming Auto Expo will provide a trigger in giving a much-needed boost to the auto industry and overall sentiment.”
Market leader Maruti Suzuki saw a 6.2% decline in sales with arch rival Hyundai managing to fare only marginally better with a 2.6% drop. Homegrown auto majors Tata Motors and Mahindra & Mahindra were the worst affected (see table).
The RBI’s recent decision to raise repo rate — the rate at which RBI lends to banks — by 0.25 percentage points to 8% may see a marginal increase in car loan interest rates that are already hovering high at around 11-13%.
“There are no green shoots in the market right now,” said R C Bhargava, chairman, MSIL.