Companies draw up strategy to fight demand slowdown; automobile body SIAM hints at paring growth target.

The coming festive season is unlikely to bring cheer for the automobile companies. Leading manufacturers said on they did not expect consumer demand to rev up sales substantially this October, due to uncertainties over increasing lending rates and fuel prices.

"Market conditions are tough.

"The fundamental economics related to increased interest rates and fuel prices have impacted affordability of buyers.

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"The festive season may bring in sales, but I doubt it will rev up the market," said Arvind Saxeana, director (marketing and sales), Hyundai Motor India Ltd.

Concurred Neeraj Garg, member of board and director (passenger cars), Volkswagen India.

"Initially, we were expecting the industry would grow by 16-17 per cent.

"But now it seems the industry would achieve single-digit growth numbers.

"So far in September, sales have not grown and with the 'shradh' period setting in, volumes are not likely to pick up this month," he said.

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On the back of strong demand during the festive season automobile sales had touched a record high last October, with the industry growing 46 per cent to report sales of 14,60,655 units during the month.

HMIL, the country's second-largest car maker, which had earlier announced plans to cut down on exports to cater to demand in the domestic market, is now taking a re-look at its exports strategy and pushing sales overseas to counter the slowdown in the domestic industry.

Over the last two months, HMIL's volumes in the domestic market declined by nine per cent to 52,319 units as compared to the corresponding period last year. Exports have grown by 11 per cent to 48,378 units.

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Tata Motors, too, which reported a decline of 15 per cent in sales at 98,187 units in the first four months this year, confirmed the company was slashing production across passenger and commercial vehicle segments.

"We have adjusted production to align with the demand.

"The production cuts vary across models," said P M Telang, managing director (India operations), Tata Motors.
Honda Siel Cars India is gearing up to beat the slowdown blues with the launch of small car Brio.

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Jnanesar Sen, senior vice-president (sales & marketing), said, "We are still constrained by supply of components after the Japan earthquake."

Industry body Society of Indian Automobile Manufacturers indicated that growth targets for the financial year may be revised downward again in October.

Pawan Goenka, president, SIAM said, "Passenger vehicle sales have not been growing. "In the first five months, the PV segment has grown by two per cent as opposed to the target of over 10 per cent.

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"Sales have dropped over the last two months by 8.9 per cent and 5.7 per cent, respectively. We may have to revise targets."

In July, SIAM had lowered its vehicle sales growth forecast for FY12 to 11-13 per cent from the earlier estimate of 12-15 per cent made in April, mainly due to higher interest rates and rising fuel prices.

SIAM, however, held the long-term prospects in the Indian market stand good. By 2017 the domestic industry is projected to sell 5.6 million vehicles while exports are to touch 1.3 million units.