Guarded response by auto companies to fuel price cutDecember 5th, 2008 - 10:42 pm ICT by IANS
New Delhi, Dec 5 (IANS) Auto majors across categories welcomed the cut in fuel prices but said more measures were needed to lift sagging sales. The government Friday announced a price cut of Rs.5 for petrol and Rs.3 for diesel. Said Sandeep Singh, Toyota Kirloskar Motor deputy managing director: “It’s a welcome move although we were expecting petrol prices to be cut by as much as Rs.7 and diesel by Rs.3.”
“Such positive measures will help improve the situation although a greater impact would be felt if the RBI (Reserve Bank of India) cut interest rates and excise duty is further slashed,” he said.
The move was also welcomed by economists such as Rajesh Shukla, Senior Fellow at Delhi-based think tank National Council of Applied Economic Research. “Slashing fuel prices will have an impact on all industries where it makes for an important input like auto and transport,” he told IANS.
Other auto majors were, however, cautious and said it was too early to gauge the impact of the cut.
Said a Hyundai spokesperson: “We don’t think it will have a big impact on sales because the financial slowdown has adversely affected a lot of factors that contribute in making a purchase decision.”
Industry lobby Confederation of Indian Industries (CII) expected the cut to bring only temporary respite.
Said CII principal advisor V. Raghuraman: “When prices go down, everybody is happy but it is definitely a temporary phenomenon and is not expected to have a huge impact on car sales because we know that prices are going to bounce back some time. There should be reforms on pricing policy by the government so that we are ready for future volatility.”
Auto analysts shared the view.
“The fuel price cut will have some amount of relief for people but it won’t ease all the problems faced by auto companies,” said Abdul Majeed, automotive partner with PricewaterhouseCoopers, a global accounting and financial consultancy.