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Outlook
Local market
trends
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Sales, particularly in
the small car segment, will drive passenger car sales in the near
term. However, within the next two years, capacity is expected to
be twice the total demand for cars.
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With developments in
the small car segment acquiring a degree of stability in terms of
price competition, the action is shifting to the mid-size car
segment. Sales in this segment will pick up as new models come in
and income levels rise but it is still some time till it comes
anywhere close to the economy sized segment.
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What will also drive
car sales is the wide availability of finance schemes by a variety
of banks and FI's.
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Sales in the used car
market is also expected to do well as more and more older models
get replaced by newer ones at a faster pace. The coming in of Euro
III and IV norms will also increase scrappage rates.
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In view of expected
surplus in the domestic market, India will emerge as one of the
leading car sourcing point in the Indian subcontinent.
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Consumers will be the
beneficiaries as a result of marketing war, as they will be offered
technologically superior products at better prices and terms and
conditions. But the customer has a risk of model discontinuation as
a result of shake-out expected in the industry.
International
trend
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The global automotive
car market is growing at a rate of only 2% per annum and is not
expected to pick up in the near term. Growth has dropped due to the
increasing levels of saturation in the larger car markets of the
world. Worldwide the trend is towards ensuring that one's products
are superior in terms of quality. This will enhance the useful life
of cars and, hence, slow down growth in sales.
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The global domination
of the larger automotive manufacturers is slowly on the wane and
the trend in sales is shifting towards more "regio-centric"
products. Automakers that have been enjoying a generally prosperous
spell would have to rethink on the way vehicles are designed,
manufactured, distributed or sold. Already, players like GM,
Volkswagen and Toyota have begun to re-examine their dealer
relationships and pricing strategies. Carmakers would now have to
think in terms of a new customer focus and provide better financing
and servicing.
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Strategic tie-ups,
mergers and acquisitions have become the talk of the day. A few
instances are Daimler Benz's tie-up with Chrysler of the US,
Ford's acquiring of Daewoo and tie up with Volvo Car
Corporation and Renault acquiring a stake in Nissan. Such deals
would certainly lead to economy in terms of costs but it remains to
be seen whether they will also create significant new opportunities
for growth.
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Untitled Document
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