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Low cost cars key to success: Fitch

January 22, 2009 16:48 IST

The key for Indian auto companies to successfully tide over the current slowdown in the automart will depend on their ability to develop low cost products like Nano with quality that can compete global majors, according to ratings agency Fitch.

The agency, which has downgraded Asian auto majors like Toyota, Honda and Hyundai... said the current downturn will continue for the next three-four years and companies in the continent would look at delaying expansion projects and shutting down plants.

"Competition will grow further. Indian companies by themeselves or in a joint venture will try to strengthen market position. This would depend on how they develop low cost products like Tata's Nano," Fitch Director Tatsuya Mizuno said in a teleconference.

It is also important to maintain high quality and comply with environmental regulations, he added.

"The emerging markets like Brazil and Russia were doing well. India and China did well in the first half of 2008 but the second half saw the sales growth going down and this will continue this year as well," Fitch Director Jeong Min Pak said, adding the difficulty of getting credit was also impacting the sales.

"Emerging markets have a significant growth potential. Suzuki has about 50 per cent market share (in India), Toyota and Honda are trying to expand operations. The market will continue to grow but the growth percentage will decline depending on the economy," Mizuno said.

He said the uncertainty of the market conditions and the structural changes in the sector were adding to the woes of the companies.

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