Deregulation of petrol and diesel prices has given rise to a lot of hue and cry in the domestic auto industry. B&E reaches out to various experts for a commentary on how the dynamics of the auto industry may change. by Sanchit Verma
Evidently, there may be a small impact on customers’ choices of passenger cars i.e. a new buyer may decide to go for a diesel car instead of petrol car or may decide to buy a B/C segment car instead of C/D segment car to factor the increased operational costs. But overall sales (number of units) would not be impacted. Experts like Abdul Majeed, Head-Auto Practice, PwC point out to B&E, “Deregulation of fuel prices had to happen; but it will not have any significant impact on India automobile industry because vehicles have become a necessity for every citizen and sales of the same are bound to happen. Probably what we may get to see is that the customers and manufacturers moving towards more fuel efficient vehicles. This will certainly bring in new and improved technology to the industry.”
But this is assuming that deregulation of fuel prices results in price rise and not price fall. Increasing prices have not only promoted development of more efficient technologies, but also have given rise to innovations in terms of alternative solutions. Today, the US and European auto industry are heading towards hybrid cars purely because of energy dependency issues.
On a macro angle, deregulation would open the Indian economy per se to the vagaries of global oil price fluctuations – and this per se becomes extremely dangerous for the Indian economy as a whole; and for the auto industry in specific, because if the economy suffers a recession (most past recessions have been because of energy price rises), that’ll put paid to all expectations on market growth. But practically speaking, this has an extremely slim chance of occurring. Why? Because, like it does in the forex market with respect to the rupee-dollar exchange rate, the government in reality will never allow oil prices to float completely free. That said, the auto industry is not going anywhere in the near future, but up.
But this is assuming that deregulation of fuel prices results in price rise and not price fall. Increasing prices have not only promoted development of more efficient technologies, but also have given rise to innovations in terms of alternative solutions. Today, the US and European auto industry are heading towards hybrid cars purely because of energy dependency issues.
On a macro angle, deregulation would open the Indian economy per se to the vagaries of global oil price fluctuations – and this per se becomes extremely dangerous for the Indian economy as a whole; and for the auto industry in specific, because if the economy suffers a recession (most past recessions have been because of energy price rises), that’ll put paid to all expectations on market growth. But practically speaking, this has an extremely slim chance of occurring. Why? Because, like it does in the forex market with respect to the rupee-dollar exchange rate, the government in reality will never allow oil prices to float completely free. That said, the auto industry is not going anywhere in the near future, but up.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
