Auto industry sales set to rise 10-14% this year

The buoyant automobile industry in India is set to slow down, relatively, and register a growth rate in the low double-digits in 2010-11, primarily due to the high base effect of 2009-10.

“Sustainable economic growth and higher disposable income will be the main growth drivers in the ongoing financial year and we expect to register a growth of 10-14 per cent this year vis-à-vis the 26.4 per cent growth of the total industry last year,” said Pawan Goenka, president, Society of Indian Automobile Manufacturers (Siam), while releasing the data today.

Agrees Ankush Arora, vice president (sales and marketing), GM India, “The increasing demand from Tier-I and Tier-II towns and several launches in the compact car category will result in 15 per cent growth in 2010-11.”
 

DOMESTIC SALES
SEGMENT	2008-09	2009-10	Growth (%)
Passenger vehicles	1552703.0	1949776.0	25.6
Commercial vehicles	384194.0	531395.0	38.3
Three-wheelers	349727.0	440368.0	25.9
Two-wheelers	7437619.0	9371231.0	26.0
Total	9724243.0	12292770.0	26.4
Source: Siam

According to Goenka, rising commodity prices are the biggest worry for the sector, as the cumulative increase in vehicle prices because of several factors could be 7-9 per cent, thereby impacting consumer sentiment. “There has been a two per cent increase in vehicle prices in February due to partial roll back of (the earlier concession on) excise duty and another one-two per cent after the new emission norms came into force. Going forward, it is estimated that commodity prices, already on an upswing, will result in two to four per cent price increase, along with an estimated two per cent increase in interest rates this year,” he said.

Siam car sales data released today show India gained the most in six years in the last financial year, at 1.53 million units as compared to 1.2 million units in 2008-09, growth of 25 per cent.

“That is the biggest percentage gain since a 29 per cent growth in the year through March 2004,” said Sugato Sen, senior director.

Total automobile sales, including passenger vehicles, commercial vehicles, two-wheelers and three-wheelers, jumped up by 26.4 per cent at 12.3 million units, as compared to 9.7 million units in 2009-10. This is the highest-ever sales in Indian automobile history, surpassing the 10.1 million units in 2006-07.

“Typically, if we look at the auto industry in India over a 10-year period, we have grown 10-14 per cent,” Goenka said, adding that last year (ended March 31, 2010) was exceptionally high because of a poor performance in 2008-09, when there was no growth.

A series of stimulus steps by the Union government helped to revive domestic consumption for cars in the world’s second-fastest-growing major economy. Annual sales of Maruti Suzuki India jumped by 20.6 per cent last year at 8,70,783 units, while that of Hyundai Motor India went up by 29 per cent at 3,14,981 units. Tata Motors registered growth of 23.4 per cent in 2009-10, at 2,85,846 units.