Key Earning
Drivers
Government
policy: The GOI policy will continue to dominate the
supply of cars. The different norms with great significance to the
sector are import duty on CKD/ SKD kits, auto components, foreign
exchange and neutralization schedule for new ventures
etc.
Excise
duty: The car industry had been asking for reduction in
excise duty so as to reduce the end prices of cars to customers and
increase the slogging demand. With continuation of liberalization
and shift in the perception (of car being a luxury product) will
lead to reduction in duties over a period of two to three years.
This will reduce the prices of cars leading to further boost in
demand.
Sales tax
duty: The levy of uniform sales tax in all the states,
will have a negative impact on the demand front, due to increased
prices.
Competition in
the sector: With the entry of all the world majors in the
car segment, the competition is expected to heat up substantial in
the next two years. This will lead to shakeout in the industry and
only those companies having a backing of multinationals with strong
commitment will be able to continue operations in the segment. This
may also lead to take over activity in the Indian car
industry.
Release of new
models: The flood of variations in existing and new models
will provide wide range of choice for the customer one year down
the line. Also these new models will be able to carve a niche for
themselves in the crowded market.
