A drive through a long endless dark tunnel best describes the journey of India’s auto sector in 2013, during which the industry witnessed record spell of decline in sales, vehicle recalls and strikes.
In what was one of the most challenging years, adverse exchange rates, after the rupee went on a downward spiral against dollar; higher input costs and fuel prices; and government hiking excise duty on sports utility vehicles (SUVs) compounded problems for automobile companies.
Hit hard by the economic downturn faced by the country, the automobile sector tried its best to woo customers with new launches, although only a handful of models such as compact sedan Amaze from Honda and sports utility vehicle EcoSport from Ford managing to beat the slowdown.
The year also saw one of the biggest recalls by any carmaker in India as US auto giant General Motors recalled 1.4 lakh units of its multi purpose vehicle Tavera, manufactured between 2005 and 2013, to address emissions and specification issues.
Amid the struggle, companies such as Bajaj Auto and Mahindra & Mahindra (M&M) had to deal with labour unrest at their plants, while Hero MotoCorp also had a tense time during its wage negotiations with workers at its Gurgaon factory.
“The year was marked by disappointing performance for the industry…the industry saw one of the most prolonged and deep slowdowns,” Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur told PTI.
Echoing similar sentiments, Ford India President and Managing Director Joginder Singh said 2013 has been a challenging year for the entire industry but “our belief in the long-term growth opportunity in India remains unchanged”.
In the longest period of slowdown witnessed by the Indian auto market, car sales dropped continuously for nine months till July this year. It recovered for two months in August and September around the festive season before falling again in October and November.
In the January-November period, car sales in India had fallen by 10.32 per cent to 16,74,450 units as against 18,67,176 units in the same period last year.
Besides cars, the commercial vehicles segment was also badly battered with economic activities such as mining and infrastructure projects came to a near halt.
It led to SIAM to seek stimulus package for the sector from the government but in vain.
Although the festival season did bring some cheer in terms of sale and September, recorded the highest level during the fiscal, RBI’s decision to hike short term lending rate impacted interest rates on car and automobile loans thus adversely affecting the sales further.
With slowing sales, manufacturers were left with no option but to curtail their production capacities and undertake unplanned temporary plant closures.