Auto Sector Loses Speed As Pollution Debate Takes Centrestage

It affected the company in India too and it was made to recall a record 3.23 lakh vehicles after a government-ordered probe found it using such diesel engines.

It remains the biggest vehicle recall so far in the country.

Volkswagen ordered the recall after the the Automotive Research Association of India (ARAI) found that diesel cars manufactured in India by Volkswagen having E189 engine were fitted with the "defeat device", which may lead to excess nitrogen oxide emission levels in on-road vehicles.

VW has admitted that 11 million diesel engine cars worldwide were fitted with the software that helped in manipulating emission tests. It faces fine of up to USD 18 billion in the US.

Besides, the year also saw some big ticket recall announcements from various carmakers including Honda Cars, General Motors, Nissan and Maruti Suzuki.

Honda Cars recalled around 2.24 lakh units of its premium sports utility vehicles - CR-V, sedans Civic, City and hatchback Jazz, manufactured between 2003 and 2012, to replace faulty airbag inflators.

Later, the company also recalled 90,210 units of its sedan City and multi-purpose vehicle Mobilio in India manufactured between December 2013 to July 2015 to replace fuel return pipe.

General Motors India recalled over a lakh units of Beat diesel to replace faulty clutch level. Maruti Suzuki recalled 33,098 units of its small car models Alto 800 and Alto K10 to rectify defective latches on right side doors.

Nonetheless, the passenger car segment saw its sales grow for 13 months in a row buoyed by several positive factors like low interest rates, low fuel prices and pent-up demand.

However, the positivity was interrupted towards the end of the year due to heavy rains in Tamil Nadu that saw several areas in Chennai and nearby places getting flooded.

Operations of various auto makers including Ford, Renault-Nissan, BMW, Royal Enfield were impacted due to the flooding of the city and its surrounding areas.

SIAM estimates the production loss at around 15 per cent due to the shutdown of various factories.

Yet, the year will also be remembered for the runaway success of new models like Hyundai Creta and Maruti Suzuki's Baleno. Honda's Jazz and Renault's Kwid also received a robust response from customers.

As the year came to a close, Maruti Suzuki finally went ahead with much delayed minority shareholder vote to let parent Suzuki own the Gujarat plant. The minority shareholders approved the the move with 89.75 per cent through a postal ballot that took place between November 16 and December 15. It also came up with Nexa dealerships to sell premium models during the year.

On the M&A front, Mahindra group acquired Italian automotive and industrial design firm Pininfarina, which is know for its design of the Ferrari and Alfa Romeo models.

PriceWaterhouse Partner Abdul Majeed said: "I do hope we will have a clear policy to address the emission issue as far as the automotive industry in concerned. Automotive industry is a capital intensive industry and certainty in policy is very important for automakers to make required investment."

Still sounding bullish on 2016 Majeed said: "Going forward with the pay commission high there will be better cash flow in the hands of central government employees which also might help the growth."

With these positives there are some negative which might impact the growth such as lower off-tick in the rural economy due to poor monsoon, in the remaining month of this fiscal inflation may go up due to lower agricultural output and there is policy uncertainty as far as diesel vehicles are concerned, he added.

"In 2016-17, I do expect the growth to continue and the rural economy to be better than what we have seen this year and if the GST comes on board that might increase the economic activity in the country which in turn will lead the overall growth in the automotive sector," he concluded.

Read More: Hyundai Creta Bags Indian Car of the Year Award for 2016

8 Most Expected SUVs in 2016

Source: PTI