Growth in car sales to halve this fiscal

The association said supply constraints from components makers facing rising costs of raw materials,besides a declining low-base effect and compliance with new emission norms later this year,will be major factors that will impact sales growth.

SIAM president Pawan Goenka said over the past six months prices of natural rubber had increased 40 per cent,while that of pig iron and steel had risen by 25 per cent and 10 per cent respectively. In order to recover costs,car manufacturers have begun increasing prices of their models.

“Anything that affects the equated monthly installment,whether it is price increases or interest rate increases,will have an impact on demand,” said Goenka,who is also M&M president (automotive and farm equipment). The April deadline for the pan-India roll out of Bharat Stage III emission norms has been put off till October. “With the change in emission norms,prices will go up,and we have always had concerns on interest rate increases.” However,on a positive note,Goenka said the slower sales growth followed strong expansion in the country’s auto industry.

SIAM has forecast the highest growth rate among all auto segments to be in commercial vehicles (goods) at 19-20 per cent with sales touching 6.2 lakh units in 2010-11 as against 5.3 lakh units last fiscal. “There is expected to be a lot of demand in the CV (commercial vehicle) space in India…it will experience good growth,” Goenka said.

In data released for the April-June quarter,SIAM said passenger vehicle sales increased 32.7 per cent at 5.54 lakh units against 4.17 lakh units sold in the same period last year. The CV segment witnessed high growth of 83 per cent with 71,216 units being sold compared with 38,890 units last year. Total two-wheeler sales during the period increased 27.6 per cent at 27.2 lakh units as against 21.3 lakh units in April-June 2009. However,growth in the July-September quarter could see a slowdown. “Supply constraints have put a little bit of strain on production,” Goenka said. “We expect these constraints to continue in the second quarter as well. We might see some slowing down of growth from the second quarter onward.”

While raw material costs have increased,the country still witnessed the second highest growth in auto sales at 31.2 per cent in the January-May period. This was just behind China,which has a growth of 39.6 per cent,and ahead of the US,the UK and Japan,which grew at 16.6 per cent,22 per cent and 13 per cent,respectively. “As infrastructure and income levels improve and cars become more affordable,more and more people would like to buy,” Goenka said.

In the month of June,car sales car sales went up by 30.79 per cent to 1.4 lakh units as against 1.07 lakh units in the same month last year.

Two-wheeler sales also witnessed good growth at 32 per cent with 9.3 lakh units being sold compared with 7.06 lakh units in June 2009. Sales of commercial vehicles sales in June surged 44.14 per cent at 52,211 units against 36,222 units in the same month last year.

Domestic sales of market leader Maruti Suzuki surged 17.87 per cent at 72,812 units,while Hyundai registered 18.90 per cent growth at 27,366 units. Riding high on increased sales on the Nano,sales of Tata Motors grew at 56.42 per cent to 32,479 units in the month.

Among two-wheelers,Hero Honda registered a growth of 16 per cent at 4.16 lakh in June 2010. Bajaj Auto grew 69 per cent with the sale of 1.86 lakh units. TVS Motor Company posted a 33 per cent growth at 1.4 lakh units while Honda Motorcycle & Scooter India (HMSI) sales increased 44 per cent to 1.37 lakh units in June. Total sales in all categories for the month stood at 12.05 lakh units,an increase of 31 per cent against the same month last year.