INSUBCONTINENT EXCLUSIVE:
expecting a bounce back in demand this year
But it is likely to be led by small, affordable cars - a sector dominated by homegrown leader Maruti Suzuki and rival Hyundai - rather than
below capacity and sales far behind original hopes, firms like Ford, Honda, Nissan, Skoda and Volkswagen face difficult decisions about
"It is a survival issue," said one senior executive with a Western automaker who declined to be named."Choosing to remain in India depends
on the cost benefit analysis of other international markets," the executive added, forecasting that, if the outlook remains grim, the number
of automakers in the country could fall.India has already seen General Motors and Harley-Davidson shut up shop last year
hurting domestic sales and exports."The uncertainty in the long-term growth prospects of the auto industry and economy have resulted in
serious challenges, including capacity utilisation," Mehrotra said.He said the pandemic demanded "agile solutions and tough decisions," but
did not give details of Ford's plans
spokesperson for the local unit, Skoda Auto Volkswagen India, said
third-largest car market by 2020, lagging only the United States and industry leader China, as car ownership per capita among its 1.3
billion people caught up with more mature markets.Instead, years of high taxes on large cars and SUVs that disproportionately
compared with $38,000 in the United States, according to Ravi Bhatia at consultancy JATO Dynamics.The long-term potential remains, analysts
3.17 million from almost a decade-low of 2.35 million in 2020.But that would still be a fraction of the top markets
LMC sees sales in China rising 7% to 22 million vehicles this year, and climbing 21% in the United States to 13.5 million.While both China
and the United States are putting the pandemic behind them, India is still recovering from a deadly second wave and has fully vaccinated
only about 5% of adults.The extra pressure on public finances has also left India at risk of losing its investment credit rating, limiting
in India drop 20%-28% last fiscal year through March 31, more than twice the decline at Maruti Suzuki and Hyundai.Utilisation levels have
That is a far cry from their initial goals
that to be a "meaningful player" it needed 10 per cent market share
an aged product range face an uphill battle and are at a greater risk of losing sales and market share," he said, adding companies like
Ford, Nissan and Honda do not currently have strong product pipelines.A lack of clarity on export policies and other regulatory hurdles are
complicating matters for global carmakers, executives at two of them said.India last year withdrew its export incentive scheme - crucial for
trade agreements between India and export nations is also putting it at a cost disadvantage compared with places like Thailand and Vietnam
up or investing further," said former Ford India executive Vinay Piparsania.
