Automobile price wars poised to intensify

With an overall growth of 17 per cent (till November), the automobile sector looks poised for further growth in 2008. However, high interest rates did have a marginal impact on two-wheeler sales that went down by 3 per cent. Car sales grew by 16 per cent following the introduction newer models by Maruti Suzuki and Korean carmaker Hyundai.

The year also saw three new models from the Maruti Suzuki stables hitting the road — the SX4 sedan in May, a diesel version of the Swift in January and the compact Zen Estilo in December.

If auto analysts are to be believed, 2008 could see the launch of as many as 60 new car models from nearly all the stables, while India's largest car maker is all set to unveil its concept car at the forthcoming 9th Auto Expo starting January 10. It is also expected to offer customers a bevy of new cars, including the sedan version of Swift, which will replace the Esteem and also Splash that is set to replace its popular Wagon-R model.

Mahindra and Mahindra is expected to launch its multi-purpose vehicle Ingenio as an answer to the Toyota Innova. Tata will unveil new-look versions of their existing models, including Tata Safari and Sumo.

Automobile sector experts feel the sector will see further growth in calendar year 2008 as interest rates have peaked and base effect turning benign in 2008 coupled with a strong overall economic growth would provide a further fillip to auto sales.

According to latest data available, automobile unit sales increased to 103,031 units in November 2007 from 88,501 units last year.

The New Year will usher a spurt in the automobile sales as manufacturers, especially in the car and motorcycle sector will go in for price discounts and introduce new models to lure customers in 2008.

"The price war for 2008 is already simmering with Tata's announcing their ₹1 lakh car and Maruti is likely to announce a cut in prices of its Maruti 800 and many more new models from different stables, and price discounts in offing, the year ahead will be very interesting," an auto sector expert said.

While the sale of commercial vehicles remained more or less unchanged this year, motorcycle sales saw a 3 per cent decline in sales largely due to an increase in interest rates.

Two-wheeler makers Hero Honda, Honda Motorcycles and Scooters Limited and TVS Motors are all set for new model launches.

The sector is expected to attract investment to the tune of ₹64,000 crore in the coming year against an investment of ₹11,000 crore during the current financial year.