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Rediff News  All News  » Business » M&M, Fiat defer launches on terror strike

M&M, Fiat defer launches on terror strike

December 08, 2008 10:48 IST

The recent terror attack on the country's financial capital, Mumbai, has forced India's largest sports utility vehicle maker Mahindra & Mahindra and Italy's Fiat to postpone their vehicle launches to January.

Both the companies, which have their head offices in Maharashtra, had earlier planned the launches by mid-December. However, the upheaval in Mumbai, coupled with the severe slowdown in vehicle demand, led the companies to postpone the launch date by a month.

M&M would have launched the much-awaited Xylo (previously known as Ingenio), a multi-purpose vehicle, this month, while Fiat India Automobiles had scheduled the launch of Linea, a mid-size sedan, in December. An executive from M&M said, "The sentiments were already down, but due to the terror attacks in Mumbai, we have decided to shift the launch date of the Xylo from this month to next month."

A spokesperson for FIAL said, "We have decided to move the launch date of Linea due to the prevailing conditions in Mumbai. Our earlier launch date was December 16. We will take a call on the rescheduled date on Monday."

Incidentally, both the launches are considered very important to the respective companies as it will mark an introduction of a new product after a gap of about six to seven years.

M&M's previous completely new product was the Scorpio, which was launched in 2002. Fiat's last new product was launched seven years ago.

Although there were a number of launches from M&M and also Fiat, to an extent, they were products that were refurbished with changes made to vehicle's exterior, interior and engines. A city-based analyst stated that it was a better move by companies to postpone their launches for now as the buying sentiment in Mumbai, which is one of the largest auto markets in India, is flagging.

Besides analysts also believe that the last quarter of this financial year may bring a bit of relief to auto makers as the auto lending rates offered by banks may get softened, easing liquidity concerns.

"New product in a brand new year might help to up sales charts for auto makers. December is usually a year when sales normally go southwards due to the 'year change effect'", said an auto analyst from a broking institution.

M&M is learnt to be heavily banking on Xylo for lifting sales, which of late has received a battering. Its domestic sales of utility vehicles dropped by more than 16 per cent and 40 per cent in October and November respectively, owing to a lack of proper financing options available in the market.

Meanwhile, Fiat's October sales rose 52 per cent to 364 units mainly on account of a low base. Last month, the company began production of the Linea at the Ranjangaon plant, near Pune.

Swaraj Baggonkar in Mumbai