The economic slowdown through the auto industry: Though the sector is seeing some resilience the world over, the general mood of pessimism is making potential buyers balk at the idea of betting money on things that cannot be considered a returnable investment.
Uncertainty over policy rates: The Reserve Bank of India (RBI) is dithering on straight talk over reducing policy rates - cash reserve ratio (CRR) and repo rate. A reduction in the rates would translate into car makers offering lower interest rates, thus reducing the amount of equated monthly installments (EMIs). Till the time there is no clear indication on this from the RBI, buyers are expected to put on hold the new buys expecting a cut in policy rates anytime now.
Time to save, not invest? Demand also fell as customers are looking to save more amd more apprehending tough times ahead. Tough times are here is ominous from the ongoing rally in gold prices around the world, with the metal hitting new all-time highs every second day over the past few days.
Weak monsoon: Even as high interest rates keep urban consumers at bay, a weak monsoon is a dampner for rural consumers as their economy is fully dependent on rain gods. Although the rains have been improving.
In expectations of more discounts: At a time when it is clear that the auto sector is in the slow lane and consumers are playing penny-pinchers, there are high expectations from the industry to either offer more freebies or reduce the price of the vehicles. This is evident from the number of cars that are being launched at lower-than-expected prices.
Maruti sales dipping: The trendsetter, which till 2008 commanded more than 60% of the market share in India, is now struggling to reclaim 50% of it. The car maker has seen sales take a hit over the past few months thanks to Manesar episode and the general mood of negativity. While this trend can be seen as a silent takeover by competitors to eat up more of Maruti's pie, it tells a lot on the new buyers in an old economy sector - The new class of buyers is going for new brands, and thus holding on to their wallets in anticipation of better and better launches.
Rising fuel prices: The oil is burning, and there can be no two thoughts on that. The general mood among the middle-class is that of giving up own vehicles and take to public transport.