The Toyota Fortuner, almost Rs 20 lakh on road in Delhi, had 2,500 bookings before its launch. The Chevrolet Cruze, about Rs 12 lakh-Rs 13.5 lakh on road in Delhi, had 1,200 pre-launch bookings and the Porsche Panamera (Rs 1.41 crore-Rs 2.01 crore, ex showroom, Delhi) had 13. According to data for September published by Society for Indian Automobile Manufacturers (SIAM), during the first half of FY10, passenger car sales have grown 14.75 per cent over last year, that of utility vehicles by 3.47 per cent and multipurpose vehicles by 21.90 per cent, mostly over Q2 FY10, with passenger cars racking up 20 per cent-plus year-on-year growth in each of the last three months.
A number of factors have contributed to this. Car manufacturers have blitzed the market with new models and facelifted older ones to keep buyer interest alive. Banks have brought interest rates down significantly from last year and are willing to loan bigger proportions of the car price. The most important, however, seems to be the rachet effect in consumption.
As bad news kept flooding in last year, the level of uncertainty kept increasing. Employees, especially in the financial, real estate and infotech sectors, were feeling the pinch. Business was down. Nobody quite knew where things were going. While the rest of the world was going into a recession, Indian growth was still positive, albeit far slower than in the previous two years. Then came the bailout packages by central banks the world over. The signal: they would do all they could to stem the slide. This perked sentiments up a bit. Next, the election of a stable government brought further confidence.
The self-imposed cutback on lifestyle expenses that kept buyers out of stores ended. The cash squirreled away to tide over a rainy day that never came for most is there to spend. And living standards are springing back to the rising trend line. China and India are supposed to be powering the global economy out of the recession. No wonder we are proud, happy and in the mood to celebrate.
Typically, on a rebound, there is a tendency to overshoot the target before coming back to a sustainable level. And at this moment, it sure looks like we are overshooting. Expect slower growth over the next quarter.