Auto industry fumes over price hike
Source: The Sangai Express / PTI

New Delhi, May 23 2012: The automobile industry has hit out at the petrol price hike saying the increase will hurt the sector which is already reeling under a slump.

"Petrol cars are not selling as such already.

With this record hike, the situation will go from bad to worse," Society of Indian Automobile Manufacturers (SIAM) Senior Director Sugato Sen told PTI.

In the short-term, sales will be further impacted while in the long term a negative consumer sentiment will be created which can hurt the growth of the industry, he added.

Expressing similar sentiments, General Motors India Vice President P Balendran said: "Earlier, the industry was expecting a growth of 8-10 per cent this fiscal but I will not be surprised if we are in the negative territory due to fuel price hike and high interest rates as the market continues to be sluggish" .

This will result in inventory pile up of petrol vehicles as more and more consumers will opt for diesel vehicles, he added.

Describing the latest price hike as a "disaster", Maruti Suzuki India Managing Executive Officer, Marketing and Sales Mayank Pareek said: "This will further increase the skew between petrol and diesel vehicle demand, which is already very wide.

This will severely affect the sales of entry level cars, which are mainly petrol driven" .

Last year, the petrol segment declined by 16.2 per cent as the demand shifted to diesel vehicles.

Now there will be more demand for diesel cars after the price hike but most of the manufacturers are running on full capacity for diesel vehicles, he added.

Pareek said the overall impact of the price hike would further dent growth of the automobile industry.

Hyundai Motor India Ltd Director Marketing and Sales Arvind Saxena said: "Demand is already under pressure on account of inflation and high interest rates.

A hike of such magnitude is neither good for the customer nor for industry" .

Passenger car sales in India witnessed the slowest growth during April in 10 years at 3.4 per cent as customer sentiment remained low due to post-Budget price hikes and high interest rates, affecting the entry-level segment most.

As per SIAM figures, domestic passenger car sales stood at 1,68,351 units in April 2012 compared to 1,62,813 units in the same month last year.

In the fiscal 2011-12, car sales in India grew by just 2.19 per cent which was the slowest since 2008-09 .

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