Auto Industry : Future Outlook 2

Short Run
1. Demand to increase on back of good monsoons and onset of festival season.
2. Capacity constraints at Auto ancilliary units could impact the sales and production besides Maruti Suzuki also faces the production constraints which are improbable to be removed till 2012 when the new plant comes up.
3. Introduction of new models by Toyota and Honda in A2 segment and by Volkwagen in A3 could boost the sales
4. Withdrawl of Cash- for Clunkers scheme operating in Euro region could further impact the exports of Maruti and Hyundai which have led them to look for African and Latin nations
5. Shortage of skilled manpower could prove a detriment to the companies trying to increase their production.


Long Run1. Development of new factories would ease the capacity crunch currently faced by OEMs.
2. Forecasts of a double Dip recession could impact the sales
3. Stress on R&D by major automobiles giants will lead to products specifically designed for Indian Consumers.
4. Development of Delhi – Mumbai corridor and other infrastructural programmes would boost the exports and help in easy transport of vehicles.
5. With companies like TATA and M&M increasing looking for export markets as production bases through acquisitions of others companies the sales of these companies is bound to increase
6. Increased entry by car majors could erode the profitability and margins in the industry where the margins are already very low.
7. Global OEMs could leverage their tie- ship with local suppliers to source components for their global operation from India and with global scenario improving this trend would be visible across.
8. Govt. decision to spend $ 1 trillion on infrastructure sector would benefit the majors operating in the HCV/LCV segment.
9. Still a high level of inflation could indirectly affect the sales due to tightening of monetory policies.
10. Prices of raw materials and petrol would play a significant role on how the sector shapes up as their demand would increase with the economies moving out of recession.
11. With increasing stress on exports by CV majors the outlook seems to be positive.