While there’s a buzz in the glitzy auto showrooms across the country, with new launches across different segments, the undercurrent seems to be a matter of concern for automotive companies in India.

Sales have become sluggish with people merely coming in to gawk and enquire, but postponing their actual purchases.

Mr P. Balendran, Vice-President of General Motors India, told Business Line that the market is bad and that the intent to buy is not being converted into purchases. The market is passing through a phase of depression that can be gauged from sluggish sales.

The current situation is the outcome of considerable confusion in the market place with regard to fuel subsidies, the likely tax imposts proposed on diesel vehicles and high interest rates.

The Government is seeking to levy taxes on diesel vehicles by increasing the excise duty by five per cent, instead of tackling the diesel subsidy issue directly.

With the five per cent duty, the Government will rake in about Rs 2,500 crore, against a gain of Rs 6,000 crore if it increases the price of diesel by one rupee per litre, he said.

Mr Pravin Shah, Chief Executive Officer of the Automotive Division, Mahindra & Mahindra, said: “There is considerable confusion in the policy from the auto sector perspective. The market is becoming difficult and challenging due to high inflation, increase in fuel prices and the continued high interest rate regime. All of these are impacting the sector and overall volumes.”

“New launches augur well for customers as it creates a buzz and helps generate volumes. The Society of Indian Automobile Manufacturers (SIAM) had indicated a growth of 10-12 per cent but during the year this may have to be revalidated based on market behaviour,” he said.

> vrishi@thehindu.co.in

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