Financial Daily from THE HINDU group of publications
Tuesday, Dec 24, 2002
Financial Daily from THE HINDU group of publications Tuesday, Dec 24, 2002 |
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Marketing
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Marketing Research Car market to grow at 9.5%: Survey Our Bureau
MUMBAI, Dec. 23 INCREASE in disposable incomes, wider choice in selecting car models and lower interest rates on loans are expected to drive car sales up to 9.5 per cent at a compounded annual rate in India by the year 2006-07, according to a report. Car sales are expected to touch 9.09 lakh units in the next five years. Research company Cris Infac, in its report, also expects lowering excise duties to be one of the reasons for the upturn. Passenger car sales growth has already touched 9.8 per cent in the first eight months of this fiscal, thanks to the higher discounts offered to the customers. According to the report, highest sales - of 12 per cent - are expected in the B segment, or the higher lifestyle cars with affordable prices, which will offer the widest variety of models. Car makers will continue to "aggressively launch'' new models in this segment. Sales of luxury cars or the A segment is expected to grow at a marginal rate of 2.7 per cent, with most sales expected in the smaller towns. The C, D and E segments are expected to grow at a high pace but will continue to form a small portion of total car sales, according to the report. Availability of cheap finance will lead to an increase in sales of utility vehicles which are likely to grow at 4.5 per cent, the report says. The report predicts that competition will not only lead to several new models being introduced, but also mean higher ad spends by carmakers. This will prevent car companies from fully passing on increases in cost of production to the customers and will put pressure on margins. As a result, companies will exploit new markets in the semi-urban and rural areas by opening new dealerships. The report believes that favourable Government regulations can encourage demand in passenger cars and utility vehicles. Currently, duties have a cascading effect, pushing car prices higher by 60 per cent. The new auto policy 2002 augurs well for the automobile industry as it has done away with export commitments and indigenisation clauses as well as allowed approval of 100 per cent foreign equity in the Indian automobile industry, according to the report.
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