Car launches dry up as rules tighten up for the auto sector
Car launches have come down by half in the last four years as automobile manufacturers struggle to adapt to rapidly changing regulations, industry executives said.
The number of car launches were 10 in 2013, which fell to nine in 2014 and rose to 12 in 2015, before plunging to five each in 2016 and 2017, Morgan Stanley Research said.
The decline seen in 2015 coincides with heightened awareness of vehicular pollution and India’s decision to leapfrog to BS VI, the toughest automobile emission norms in the world, skipping the intermediate BS V. With new safety and crash testing norms taking effect in October 2018, there is little chance of new launches any time soon either.
“Most of the car makers are either reeling under losses or have huge investments in upgrading their products to BS VI emission norms by 2020. Hence, the number of new product launches has dried up. The Indian market was supposed to touch the three-million sales mark two years back, but due to certain challenges, the market did not grow,” a top executive at one of the leading car makers said on condition of anonymity.
According to industry execu- tives that Mint spoke to, except the top four car makers, most others have refrained from investing further as sales have stagnated at around 3 million.
Take out Maruti Suzuki India Ltd, India’s largest carmaker, and it gets worse. Even South Korean car maker Hyundai Motor India Ltd – second largest car maker – has not launched any new brand since Creta in 2015.
“Apart from Maruti, most car makers have been very cautious about investing further in the market, the reason being the jump from BS IV to BS VI norms and other challenges like profitability. Also, the industry has made losses from judicial interventions as well like banning diesel cars, trucks and suddenly stopping the sales of BS 3 vehicles. GST and demonetisation also played their part in pulling down the market,” said another senior industry executive, requesting anonymity.
Japanese car maker Toyota has already said it will not introduce any new vehicle in India before BS VI norms kick in.
NEW DELHI: