Auto Industry Growth Slides In Fiscal

The current fiscal has been lacklustre for the domestic auto industry with three of the four broad categories -- commercial vehicles, tractors, and passenger cars and utility vehicles -- registering a decline in growth during the first eleven months.

Industry players foresee a revival in sales of commercial vehicles and tractors, considered pointers to the economic growth of the country, in about 5-7 months' time. This, they said, is subject to a better GDP growth, higher infrastructure spending and implementation of agricultural reforms.

Commercial vehicles sales during the April-February period continued their slide to touch 1.13 lakh units, against sales of 1.17 lakh and 1.39 lakh units during the previous two fiscals. The year was marked by a change in the product mix, with operators preferring heavy and very low tonnage vehicles over the medium load carriers.

Tractor sales were badly hit during the year, as excessive grain production, and other factors severely impacted agricultural incomes. Top industry sources expect total sales for the fiscal to barely touch 2 lakh units, much below the sales of 2.37 lakh units and 2.6 lakh units recorded during 2000-01 and 1999-2000, respectively, according to the Tractor Manufacturers' Association figures. As a result, most of the 13 players in the industry are currently making losses.

Despite the eight per cent reduction in excise duty announced by the government on passenger cars and two-wheelers, sales of passenger cars and scooters were marginally lower. In the case of passenger cars, this was due to subsequent price hikes by some leading players such as Maruti and Hyundai.

During the April-February period, passenger car sales showed a flat growth at 5.04 lakh units, while scooter sales were marginally lower at 7.89 lakh units. The two-wheeler industry grew 15.8 per cent during the April-February period, driven single-handedly by a 36.6 per cent rise in motorcycle sales.

Murad Ali Baig, an independent consultant & columnist said: "The buoyant February sales of passenger cars are an indication that the industry will grow in the coming year. Total car sales would have been higher if sales of Daewoo Motors were included in the Siam figures. After the slowdown in the past two years, the passenger car industry is expected to grow 10-15 per cent in the next fiscal."

"In the two-wheelers segment, it is difficult for motorcycles to sustain growth at such high levels. While growth of motorcycles may come down, scooter sales could go up as cheaper and better models are now available," he added.