Things have never been so bad for the Indian auto industry. For instance, as per SIAM, car sales in India have fallen 4.7% in the first six months of this fiscal. This is the sharpest decline in half-year sales since 2002-2003. Indeed, auto sales were subdued in FY13 and the trend is expected to continue for FY14 too as slowdown in the economy, higher interest costs and fuel costs take its toll. Besides cars, commercial vehicles have been particularly hit hard as the fortunes of this segment are closely linked to that of the Indian economy. The silver lining in the cloud this fiscal has been healthy monsoons. And so there are hopes that this should raise incomes which will spur some demand for cars. But a broader recovery this fiscal looks doubtful.
Meanwhile, many of the auto companies have gone in for price hikes despite such difficult conditions to pass on costs related to the steep depreciation for the rupee. Most of them are focusing on product launches as well. While the latter may not do much in terms of bolstering the fortunes of the sector in a weak environment, we believe that in the longer term product launches are essential on account of the stiff competition in the auto space.
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Meanwhile, many of the auto companies have gone in for price hikes despite such difficult conditions to pass on costs related to the steep depreciation for the rupee. Most of them are focusing on product launches as well. While the latter may not do much in terms of bolstering the fortunes of the sector in a weak environment, we believe that in the longer term product launches are essential on account of the stiff competition in the auto space.
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