Passenger car manufacturers are expected to report a decline in sales in 2009. Auto analysts have stated that as various companies have fixed lower targets compared to 2008.
Maruti Suzuki's profits are expected to fall by 16 percent. This is despite Maruti Suzuki and Hyundai Motors targetting rural areas. The profit of Tata Motors is expected to plunge by 79.6 percent compared to 2008.
Survey conducted by several financial firms like Motilal Oswal Securities Ltd., India Infoline Ltd., KR Choksey shares and Securities Ltd., Emkay Global Financial Services and others reveal low profit for the year 2009.
Analysts have pointed out that the sales of passenger cars picked up in the last quarter of 2008-09 fiscal year. The BSE auto index has also shot up by 11.9 percent in April. This is a significant jump from the single digit index that prevailed in latter part of 2008. They believe that the worst for Indian car market is over.
Clever strategies by Maruti Suzuki and Hyundai Motors to target government employees who received salary arrears, helped them sail past the two quarters.
However, Emkay Global expects profitability to fall by 7 percent as compared to the fourth quarter of last fiscal. While, Jatin Chawla of IIFL Capital has reported that buoyancy in auto sales may not sustain beyond June quarter. He cites reasons like tightening bank norms on car loans and waning impact of revision of government employee salaries.
An analyst of Religare Securities Limited has said that numbers are not going to be good this year. He says that Maruti Suzuki may buck the trend and post growth, but it will require some clever marketing. Other auto companies are going to face the red.
Smaller towns and rural markets are going to be the new markets, which will help auto companies to sustain profit. Strong distribution network of big players like Maruti Suzuki, Mahindra and Mahindra and Tata Motors will play a crucial role in expansion plans.