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India carmakers mull future

News, 18 January 2016

NEW DELHI: As India's carmakers gear up for next month's Auto Expo in Delhi, the industry is digesting the news that it was the fastest-growing market globally last year and considering the impact of possible future restrictions on car use and diesel models.

India is now the fifth largest passenger car market in the world, with sales volumes having risen 7.64% in the first 11 months of 2015, fuelled by positive customer sentiment in cities and an improving economy.

Anil Sharma, principal analyst at consulting firm IHS Automotive, predicted double-digit growth in 2016 and said India would become the third-largest passenger vehicle market by 2018.

But Vishnu Mathur, director general of the Society of Indian Automotive Manufacturers (SIAM), sounded a note of caution, saying that "abrupt policy changes will impact sales".

At the end of last year, the Supreme Court imposed a three-month ban on the sale and registration of larger diesel passenger vehicles in Delhi and the National Capital Region in an attempt to reduce pollution and improve air quality.

SIAM figures indicate that some 37% of all passenger cars sold in the year to March 2015 were diesel variants, but that figure rises to around 90% in certain categories, such as SUVs.

Delhi was also the focus of a just-ended two-week trial that saw cars with licence plates ending in odd and even numbers allowed on the road on alternate days with a Rs 2,000 fine for drivers in breach of the rules.

This appears to have relieved the daily congestion and reduced pollution levels, although the Times of India noted that most pollution meters continued to show particulate matter levels far above permissible limits.

Ashish Masih, editor-in-chief of Autoportal.com, expected that the scheme would come back within a few months with a consequent impact on car-buying decisions: "the sale of second-hand petrol variants and hybrids will go up in the coming years," he told Afaqs.

Uber also claimed to have seen a "behavioural shift" as people turned to its carpooling initiative during the trial, which it said confirmed a trend "from pride in ownership to asset sharing".

Data sourced from Mint, Financial Times, Times of India, Afaqs; additional content by Warc staff