The country's automobile industry may take a hit in the short term as some consumers defer their purchases because of the sharp hike in fuel prices, but the the longer term prospects for the sector continues to remain robust.
A senior official at Maruti Suzuki India Ltd, the country's largest car maker, said things will be back to normal in a couple of months. "Car penetration in India remains low at 9 per 1000 people, hence the potential market is still there. Moreover considering our public transport system, a car is a necessity today and purchases cannot be postponed indefinitely," said Mayank Pareek, Executive Officer Sales and Marketing.
Rival Hyundai Motor India Ltd. is a bit pessimistic though. HMIL Vice President sales and marketing Arvind Saxena said that the price hike has further aggravated "the woes of Indian consumers.”
“This will further dampen the demand for new cars,” he said.
The silver lining, however, is that the hike will give a thrust to small cars and alternate fuel technologies. "I see a shift towards compact cars and demand for more fuel efficient cars and alternate fuels will increase," Saxena said.
Two wheeler manufacturer TVS Motor Ltd said that this quantum of price hike was expected and consumers have already adjusted to it. "A more than Rs 5 per litre hike would have had a dramatic impact but this hike was already expected and the adjustment has been made," said TVS Vice President Sales and Marketing R Chandramouli. Analysts too agree. "Oil price hikes have happened before and if at all this hike will have a marginal impact," said KPMG Director Industrial Markets Yezdi Nagporewala.