Election is key for Indian car industry

Rakesh Srivastava, senior vice president for sales and marketing at Hyundai Motor India, agreed that he did not expect demand to pick up before the election, but hoped the situation would then improve

Indian automakers are keeping their hopes on the general election in May this year to provide political certainty and to increase domestic demand, industry insiders have confirmed.

In comments to Bloomberg at the recent auto show New Delhi,  a series of leading figures from the Indian auto industry made it clear that it is good for us to not to keep any expectations regarding domestic sale to grow up before election, which will decide the fate for the current congress government.

Till then, automakers have decided for  holding back 11 of the 14 new models displayed at the biennial car show, which witnessed 20% lower attendance levels than in 2012.

"We think new models will help create excitement and also expect buyers to come to market once political uncertainty clears," said Ammar Master, an analyst at LMC Automotive, who hesitantly expected vehicle sales may rise 7% in 2014.

Rakesh Srivastava, senior vice president for sales and marketing at Hyundai Motor India, agreed that he didn't expect demand to pick up before the election, but hoped the situation would then improve.

"Regardless of which party comes to power, it should lead to improvement in investment climate, which would help in terms of conversion of pent-up demand," he said.

Echoing his remarks, R.C. Bhargava, chairman of Maruti Suzuki India Ltd, said: "Demand will only turn around once we know who's going to form the government, and the economic policies they take and how that impacts sentiment."

Sales increase 26% in 2010, 18% in 2005 and an impressive 49% during the 1999-2000 fiscal year while deliveries increased by an average 31% over the past three election years – a rate more than twice the average 13% annual growth recorded over the last 15 years.

However, automakers should be exalt by data from the Society of Indian Automobile Manufacturers which shows passenger-vehicle sales rose in each of the fiscal years when Indian voters went the election polls in 2009, 2004 and 1999.

In the meantime, Ranjit Yadav, president of the passenger vehicle business at Tata Motors,said  "we expect demand to remain stressed … we expect a tough few quarters ahead".