Carmakers face challenges from Japan crisis, rate hikes

Mumbai, Mar 23: Faced with surging raw material costs, Indian carmakers now face three additional serious challenges, including a shortage of key components, which could impact their performance this year.

While they could pass on the burden of increased input costs to customers, a shortage of components compounded by the Mar 11 tsunami and quake in Japan and Reserve Bank's rate hikes - which could affect car financing - have made them jittery over their prospects in the short-to-medium-term.

"Yes, the industry is facing problems, but we are taking it as a big challenge. We think this is a passing phase - we see light at the end of tunnel," General Motors India Vice-President P Balendran told PTI here.

A shortage of critical components, many of them sourced from Japan where many automobile facilities, besides others, have been damaged by the powerful quake, has made the going tough for the industry which is likely to find it difficult to meet its sales target, he said.

"Frankly, it is difficult to meet earlier projected (sales) figure this time. A shortage of components, including tyres, casting and steel, has made things difficult," he said.

The hike in key rates by the Reserve Bank, which is expected to push up interest rates on auto loans, could deter potential buyers, Balendran said.

The General Motors executive said "it is difficult to predict a timeline for the problems to be resolved." Home-grown auto major Mahindra

PTI