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Motown: Launches in line, demand uncertain

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French auto parts supplier Valeo is launching new products and opening new factories on the hope that the present sluggishness in the Indian market will give way to a revival in the ensuing months.

However, other smaller tier-III suppliers, which supply to companies like Valeo, are waiting for big orders from car and SUV making firms to resume. With no clear indication on production patterns and new launches expected only after August, several suppliers are holding back investments.

Arvind Saxena, director (sales and marketing), Hyundai Motor India (HMIL), said, “Next six-seven months are (going to be) challenging from the industry perspective because there is nothing which can bring in a substantial change in demand. Car is bought on need but mostly bought on sentiment, so right now there is no general optimism in the market.”

Hyundai is holding back multi-crore investments scheduled for setting up a diesel engine plant, following flip-flops by the government on issues relating to the fuel’s deregulation. The Korean car brand is also launching only one new product in the market this year in addition to a face-lifted sedan.

P R Dhaamodharan, group president and MD, Valeo India, said, “Of course, when the market goes down, everybody will feel the pressures. The last few months have not been encouraging. However, we are here for a long innings. The second quarter should usher in some revival.”

The Society of Indian Automobile Manufacturers has predicted a volume growth of 13 per cent for the next financial year, but some manufacturers like Maruti believe that the realistic growth should be around 10 per cent.

With the current market slide in demand, car companies are playing safe by introducing products only towards the festive period of the year. Several new vehicles comprising sedans and SUVs are slated to come only after August this year.

Ford’s all-new global compact SUV Eco-Sport will be made available towards the end of the year, while Nissan’s new multi-seater van Evalia will come in August. Others including General Motors Chevrolet Sail and a new multi-purpose vehicle will be launched in the second half of the year.

Lowell Paddock, president and managing director, General Motors India, said, “Where we would wind up (this year) is difficult to say. There is lot of anxiety as far as the state of Indian economy is concerned. We do not know which way will inflation go.”

The industry is looking towards the next festive period for a revival in sentiments led by an expected easing of interest rates on vehicle and other consumer loans in the coming months. High interest rates and jump in fuel costs have put brakes on vehicle demand. SUV segment market leader Mahindra & Mahindra too will launch products from the SsangYong portfolio after June.

To capitalise on the lack of interest by its competitors, car market leader, Maruti Suzuki, will introduce two new models including the multi-seater Ertiga in April and a compact version of the Swift DZire sedan launched this month.

German car maker, Volkswagen, will not launch any new vehicle but the face-lifted version of the Touareg, also in April, followed by the refurbished Beetle. While the focus for car makers has been the compact segment in the past few years, no new budget small cars are expected for launch this year.

Two-wheeler manufacturers are, however, keen to get their new products rolling in order to keep the momentum in demand high. Bajaj Auto, Hero MotoCorp, Honda Motorcycle and Scooter India, TVS Motors and KTM have lined up a slew of launches spread over the next six months.

Unlike the passenger vehicle segment (including cars and SUVs), whose growth has remained flat 1.80 million units in the nine months ended December, the domestic two-wheeler market has grown by 15 per cent, recording sales of nearly 10 million units during the same period.