The Society of Indian Automobile Manufacturers (SIAM), on Wednesday, revised car sales projection for the fourth time in the present fiscal, forecasting a meagre 0-1 per cent growth, making this the weakest the industry has posted in nine years.
The downward projection reflects severe slowdown in the industry across segments.
“Based on the third quarter performance, SIAM is revising the projections. There are significant changes in expectations based on the performance of all segments till date,” SIAM President S. Sandilya said told reporters here.
SIAM Deputy Director-General Sugato Sen said continuous changes in the overall economic scenario as well as the domestic and international markets impact growth.
“Initially we thought that the market will perform well. So we projected a growth of 9-11 per cent, but it is not the case. Every time a new issue crops up. So, accordingly, we have to revise the projections,” he said.
SIAM has lowered car sales growth projection to just 0-1 per cent for this fiscal, from 1-3 per cent and 9-11 per cent announced in October and July, respectively. In April, it had forecast a growth of 10-12 per cent for 2012-13.
Mr. Sandilya said there were no signs of significant growth in the sector because of slow economic growth, inflation, high vehicle finance and fuel prices and differential excise rates.
Target missed
SIAM also said the auto industry would miss its ambitious target of clocking an annual turnover of $145 billion by 2016 under the Automotive Mission Plan (AMP).
“The AMP target of annual turnover of $145 billion by 2016 is expected to be missed by $34 billion,” Mr. Sandilya said.
In the third quarter of this fiscal (October-December), passenger vehicle sales, including cars, grew by 11 per cent at 6.81 lakh units.
He said the country’s overall economic situation, low sentiments, high petrol prices and interest rates are among the factors hurting the overall sales of the industry. The industry’s sales were expected to grow by 3-5 per cent, much lower than the earlier estimate of 11-13 per cent for this fiscal, Mr. Sandilya said.
SIAM has also lowered the growth projections for other segments this fiscal. Passenger vehicles sales, which include cars and utility vehicles, have been pegged to grow at 7-10 per cent, as against the earlier estimate of 11-13 per cent.
SIAM said, however, the utility vehicles (UVs) segment — which has seen a jump in sales due to launch of price-attractive models — might grow by 56-64 per cent as against 29-31 per cent projected before.
Two-wheelers were estimated to grow at a much lower rate of 3-5 per cent this fiscal, as against an earlier projection of 11-13 per cent, The commercial vehicles (CVs) segment is also forecast to grow at a lower rate of 0-2 per cent, as against the earlier projection of 6-8 per cent.
The industry body has kept the growth forecast for the three-wheeler segment at 4-7 per cent.
To boost the commercial vehicle segment, he asked the government to take steps such as modernisation of vehicle fleet, incentivise banks financing Indian products abroad and increase the depreciation rate for CVs to 60 per cent.
The overall growth in domestic sales during April-December 2012 was 4.57 per cent over the same period last year.
In December 2012, market leader Maruti Suzuki’s sales stood at 68,729 units marginally down from 69,329 in the same period of 2011. Hyundai Motor India’s sales too decreased to 26,651 units during the reported period as against 29,449 units in the year-ago period.
Home-grown auto major Tata Motors’ car sales were down by about 52 per cent at 11, 257 units.
To revive the growth of the industry, the SIAM President has asked the government to reduce interest rates, increase infrastructure spending, opening of the mining sector and controlling inflation through supply-side improvement.
SIAM also suggested the government to reduce excise duty on cars other than small cars to 20 per cent and said that the duty on 10-13 seater vehicles should be on a par with buses, that is, 10 per cent.
