Two wheeler prices to head south as Nano drives in

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New Delhi, Jan 11 (UNI) The price of two-wheelers is expected to go down 20 per cent and bank's loan exposure to four-wheeler industry is likely to go up by 25 per cent with 35 per cent decline in the prices of second hand cars, after 'Nano' cars rolls down on roads from October.

A survey by industry body Assocham said the launch of the new Tata car will pose a challenge to two-wheeler manufactures, whose market size would shrink to a large extent and thus be forced to innovate new technologies, as a result of which, their prices are anticipated to go down by 20 per cent, to help them their market size.

''Going by popularity of Tata-Nano launch, it is expected that bank's loans for car sector would register an increase by nearly 25 per cent as four wheelers segment is going to create immense competition since many more players have expressed their intentions to make budgeted cars for which people have been keenly waiting for,'' the Chamber's President Venugopal N Dhoot said.

Currently, less than 10 per cent of total bank's loan exposure is restricted to four wheelers segment, maximum being the construction and real estate sector which is about 26 per cent, Mr Dhoot added.

70 per cent of the CEOs affiliated to the chamber who participated in the survey, felt that in metros and larger towns, the current market size of budgeted car manufacturers will witness a major reversal and the Nano car will capture the largest market size, which can be over 50 per cent in next 3-5 years after this car comes into the market sometime in the month of October this year.

The negative fall out of the Nano car launch would be felt mostly by auto-manufacturers and those who encourage sales of old and prototype cars, as their presence on roads would fizzle out at an accelerated pace, 60 per cent of the CEOs said.

The study warned that congestion on roads would multiply which will put pressures on governments for improving the existing road networks to the extent that India would have to put up multistoried roads on lines of Japan and other economies of scale to accommodate the growth in automobile sector.

The survey also found that five years ago, there was a craze among youths be it in metros and semi-urban for two-wheelers which spurred up their demand. However, the situations has now changed and the craze would be shifting towards four wheelers particularly when these are available at a price of Rs one lakh.

The chamber has also recorded that most scooters and mopeds launched last year have met a poor response from buyers and this has further strengthened the claims of pessimists.


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