While the hike in excise duty by two per cent has forced auto makers like Ford India to pass it on to the consumers, Michael Boneham, president and managing director of the company believes interest rates rationalisation may happen in near future. While initial quarter of 2012 has seen a dip in demand from consumers, in an interview with Vinay Umarji, Boneham talks about the industry's optimism for the remaining part of 2012. Excerpts:
What kind of impact on demand due to see due to recent budget announcements?
We see a short-term impact of the budget on demand. It is heavily dependent on what goes on from a fiscal policy point of view now. The RBI has been very responsible in dealing with inflation and bringing it down a reasonable level. It has released some liquidity and I hope that has provided from some reduction in interest rates which will help offset the excise duty hike. We will see interest rates rationalisation happening in near future.
What steps has the industry taken to deter this impact?
We have been talking to financiers and our banking partners but they are restricted on the cost of funds. That is something which we will have to deal with. What's more important is seeing these talks come off.
Last calendar year was not so good for auto players in terms of growth. Do you think the situation will continue this year?
No, I don't expect that. I think in the second half of the calendar year I think we will see an increase of overall 10 per cent year-on-year. Consumers will come back by the second half of 2012.
Players like Peugeot have been going slow with their Gujarat plans. How is Ford India positioned?
Ford India is on track. We have our foot on the accelerator and we are not going to stop.
You have mentioned that Ford will bring eight new vehicles to India by mid-decade from the Sanand plants. Which ones?
We are not going to make any announcement of new vehicles. As of now, we have just laid the foundation for the Sanand plant and will commission it by 2014.