Car sales to grow by 13% in FY13, say experts

Automobile industry body SIAM today lowered car sales growth forecast for the third time to 0-2% for the ongoing fiscal citing unfavourable macro economic conditions, but said the same could see a jump by 11-13% in  FY13.

"The factors that are affecting the automobile industry such as high interest rates, inflation, high petrol prices and negative economic sentiments are still prevalent. Hence, taking those into consideration we see growth in the ongoing fiscal to be lower from the previous forecast," Society of Indian Automobile Manufacturers (SIAM) S Sandilya told reporters at the 11th Auto Expo here.

As per the latest revised forecast, the overall automobile industry is expected to grow by 11-13% this fiscal.

The same for passenger cars has been pegged at 0-2%, while that of two-wheelers are at 13-15% and that of commercial vehicles at 18-20%.

Earlier in October last year, SIAM had significantly lowered passenger car sales growth forecast for FY12 to 2-4% due to lower output at Maruti Suzuki because of labour issues, and higher lending rates from 10-12% predicted in July, 2011.

In October, SIAM had revised its projections for total sales marginally upward to 11-14% for FY12. It had also revised upward the projection for the two-wheeler segment to 13-15%. Growth projections for commercial vehicles were revised northward at 13-15%.

Commenting on the forecast for FY13, Sandilya said: "We don't foresee interest rates going up further in the next fiscal. Also, there is expectation of stability on the fuel prices and all the other indicators are positive".

He further said the auto industry is expecting RBI to reduce interest rates by 250-500 basis points in the next fiscal.

Based on these assumptions, SIAM said while the passenger cars sales will grow by 11-13% in FY13, commercial vehicles will witness 12-14% growth. The two-wheeler segment is pegged to rise by 11-14% and three-wheeler segment by 6-9%.

"Overall we see the auto domestic industry growing by 10-12% in the next fiscal," Sandilya said.

He, however, said the forecast has not taken into account the possible impact of any change in excise duty structure in the Budget or any other announcement that can impact the auto industry.

Asked about expectations from the Budget for FY13, Sandilya said the auto industry hopes that the Rs 15,000 additional duty imposed on big cars will be removed.