Indian car makers are now rolling under inflationary pressures. The sudden increases in fuel prices and steel prices coupled with high interest rates have applied brakes to the growth level of the Indian car industry.
Further to this, slow moving stock market has also influenced the growth level. Major car players like Tata Motors, Hyundai, Maruti and Honda are battling hard with the inflations to boost the car sales. Sources have declared that most of the sales is coming through discounts and offers that these players are providing.
Inflation has not only affected the players but the entire auto industry which comprises the car dealers, financers, officials and all those who are associated with the car industry. Dealers are pressurised by the manufacturers to push sales and gain a high profit margin and the financers are forced by the dealers as well as the manufacturers to reduce the loan interest and pay 100% finance to the consumers. The bottom line states that the car industry is expected to fall to 8-9% in 2008 from 13-14% last year.
The high input cost of production has compelled the car manufacturers to increase the price to almost 3-4% in April. To boost the sale of new launches like SX4, Spark, City and Logan, the respective manufacturers along with their dealers have offered subventions. Some are even offering exchange bonuses and some are offering competitive finance rates.
The Indian car industry was at the pinnacle since last seven years but inflation has brought down the market to about 4.7% to 96.48-lakh units in 2007-08 compare to 10.12-lakh units last fiscal.