Hyundai said it expects its sales in India to rise 15% to 17% this year although overall market growth is poised to cool from last year’s increase of 31% as rising prices and interest rates slow demand.
Rising steel and rubber prices have forced some Indian carmakers to raise prices although Hyundai, the second-largest carmaker after Maruti Suzuki in India, has managed to keep prices steady.
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Arvind Saxena, director and board member of Hyundai Motor India, said that maintaining pricing levels is one the biggest challenges as raw materials costs increase. He told Reuters he expects the Indian automotive industry to grow 12% to 14% over the next five years from 1.9m units in 2010.
Hyundai is the leading exporter of cars from India and it posted a 1% rise in March total sales to 55,552 units. Domestic sales grew 23.1% in 2010 but exports fell 8.5%.
The automaker plans to spend INR4bn (US$89.6m) on a diesel engine plant in India, which will be operational in 2013, Saxena said. The company also plans to launch two models a year for the next three years.
General Motors also said it expects to see softening growth this year in India due to price pressures and easing of pent-up demand.
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By GlobalDataKarl Slym, president and managing director of GM India, said: “I think everyone is back to thinking that it will be something like the original prediction for last year which was really coming off a pent-up demand of the previous year when we had more of a recessionary time frame.”
Slym said rising input costs, particularly of crude oil, steel, rubber and plastics, were “very worrying,” but that there were no current plans to raise prices of vehicles in India.
GM India aims to grow at twice the rate of the country’s automotive sector in 2011, Slym said.
“Last year we doubled the growth of the industry in the country and our plan would be the same this year as well,” he told Reuters. GM sold 110,000 vehicles in India last year, roughly the same amount Maruti Suzuki sells in a month.
Maruti Suzuki and rival Tata Motors have raised vehicle prices this year due to mounting input costs.
