Mixed outlook for Indian car market

6 March 2013

NEW DELHI: Many foreign carmakers have reported double-digit sales growth in India, at the same time as numerous domestic manufacturers have slashed prices in an attempt to halt falling sales.

Audi, the German luxury car maker, recorded a 29% increase in unit sales during February and said its sports utility vehicle range had led the way.

Tata, by contrast, saw unit sales fall 69% in February compared to a year earlier and it announced it was cutting the prices of its Indica and Manza range of passenger cars by up to Rs 50,000.

"We want to boost the morale of customers to give them a value proposition and make it more attractive to improve weak market sentiments," a Tata Motors spokesperson told The Economic Times.

Both manufacturers have to deal with the recent budget in which the Indian government increased the excise duty on sports utility vehicles from 27% to 30%.

"We will have to seriously evaluate the impact of this hike on our prices and have no choice other than to pass it on to customers," said Michael Perschke of Audi India.

Tata increased the prices of its sports utility vehicle range by up to Rs 11,000 following the excise duty hike in the Budget, meaning the total price increase could be as high as Rs 35,000.

Buyers of top-end models are regarded as being able to afford the extra taxes. Takayuki Ishida, CEO of Nissan Motor India, indicated that only one of his models might be affected and added that "normally customers getting a 370Z do not care about (additional) duty costs".

He was speaking as he explained that Nissan was looking at the possibility of setting up a new plant to build Datsun cars in India.

This comes on top of a recent announcement that an alliance between Nissan and Renault, the French automaker, will invest $320m to set up a second plant in India.

And Jaguar Land Rover, part of Tata Motors, is also reported to be looking at the potential for manufacturing cars in India.

Data sourced from The Economic Times; additional content by Warc staff