Auto sales in India to pick up speed from October

The Times of India (Chennai, India) - The global automobile industry seems to be getting back on track with the first half of the calendar year showing a 6% growth overall says a recent report. Although Europe is still a problem zone - with the PIGS nations Portugal, Italy, Greece and Spain causing most of the fall in overall sales - the rest of the world is beginning to get back on track. After the tsunami effect last year, Japan is now top of the roster in terms of vehicle demand, leading the pack at over 50% growth. Russia's nearly 30% growth makes it the highest growth market among the BRIC bloc and the second highest globally. But the real good news, say auto experts, is the regeneration of US and Canada where growth is back and has hit a post-2007 high.

While both India and China are witnessing lower growth compared to the go-go year of 2010, things are still not too bad right now. India saw its domestic car sales go up by nearly 7% this Julythough last year's low base - due to the labour unrest at Maruti's Manesar plant - is partly responsible for that revival. Meanwhile motorcycle sales growth is now down to 5% in July while overall two-wheelers totted up 7.5% growth. While most of the industry expects sales to pick up from October on as the festival demand kicks in, Maruti's labour problems, once again at Manesar, will impact sales figures in August and will drag the entire car industry down once more. Indian auto experts say if the banks start tweaking their auto loan rates, as they have started to with home loans, things could improve though fuel price is still a big road block.

The good news in north America and the rest of the BRIC world will have an impact on not only Indian component companies who supply to global Tier 1 vendors but also global car makers who source vehicles from India for export in select global markets. Hyundai, for instance, is using its export buffer to make up for the slack in domestic demand. That way it does not need to idle its factories in India as some other auto companies have had to do. Many MNCs like Ford export vehicles from India to markets like South Africa which is also showing decent growth. Others like GM, which encourage global sourcing of components from India, will also be able to set higher targets for its suppliers as home demand in the US picks up speed.