Four Wheeler Industry

Topics: Petroleum, Interest rate, Monetary policy Pages: 2 (290 words) Published: February 20, 2013
Points for ppt
Factors affecting growth of four wheeler industry
1) Prices of four wheeler
2) Price of fuel
3) Income of people
4) Bank Loan Rates
5) Prices of other four wheeler
6) Slow Economic Growth

1) Prices of four wheeler:
Car companies had hiked prices by 1-3% in January2012 to pass on their higher cost burdens. The union government raised the excise duty across products by 2%, which car companies passed onto customers by increasing prices immediately. Also some large states (like Maharashtra) have raised car registration fees and/or road taxes. These price hikes mean that for any prospective buyer of a Maruti Swift diesel in Mumbai, the price has gone up by ~Rs55k (8%) since Nov-11.

2) Fuel Price Hike:
Fuel price hikes could hit the demand recovery
As a result of the surge in global crude oil prices and currency (INR) depreciation, oil marketing companies (OMC) have raised prices seven times in the last 18 months. The total increase in petrol prices has been Rs15/litre (or 25%) between Oct-10 and Apr-12. By contrast, diesel prices have remained broadly flat during the period. As the price differential between petrol and diesel has expanded, the share of diesel cars sold in India has increased.

4) Bank Loan Rates
The Reserve Bank of India (RBI, India’s central bank) has increased bank interest rates by 375bp over the last 18 months. Currently the rate of interest is around 15%

5) Prices of other four wheeler
The trend of inclined favor of customers towards the diesel has started and fear of petrol price hike further has shown its clear footprints in sales figures. Except Honda, all petrol only models lost large chunk in sales.
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