The Hindu Business Line : Passenger car market growth climbs down to 7.5%

Growth in the domestic passenger car market cooled off a bit in 2005-06, growing by a single digit 7.5 per cent on a high base year, even as the outlook for the current year looks bullish following the eight per cent excise duty cut on small cars announced in the Budget.

The automotive industry also crossed a landmark in the year with total vehicle production in 2005-06 (including tractors) touching a new high of 10 million units.

Meanwhile, according to data released by the Society of Indian Automobile Manufacturers (SIAM), car sales in the year ended March 31, 2006, stood at 8,82,094 units against 8,20,179 units in 2004-05.

The growth in 2005-06, however, was a climb down from the high 17.7 per cent rise in the year ended March 31, 2005.

Sales are, however, expected to see high growth this fiscal with analysts pointing out that the eight per cent excise duty cut on small cars is likely to bring in more numbers. This can also be gauged by the high 23 per cent growth in March by when most of the car companies had announced a price cut to pass the excise duty benefit to the consumers.

Motorcycles continued the upward march as sales soared by 17.1 per cent in the domestic market and touched 58,15,417 units against 49,64,753 units in 2004-05.

Two-wheelers segment

Overall, the two-wheeler segment, including scooters and motorcycles, grew 13.6 per cent at 70,56,317 units against 62,09,765 units in 2004-05.

The scooter segment, however, saw a 1.5 per cent fall at 9,08,159 units against 9,22,428 units in 2004-05, principally due to a labour strike affecting sales of market leader Honda Motorcycle and Scooter India.

Growth in the commercial vehicles segment too seemed to slow down in 2005-06, growing 10.1 per cent at 3,50,683 against 3,18,430 units in the previous year. This was triggered by a major downturn in the demand for medium and heavy commercial vehicles , which managed a 4.5 per cent growth against 23 per cent growth in the year ended March 31, 2005.

However, light commercial vehicles provided the growth impetus, helped by Tata's sub one-tonne transportation vehicle Ace, with sales growing 19.4 per cent at 1,43,237 units against 1,19,924 units in 2004-05.

Three-wheelers also rounded up the financial year on a double-digit growth as sales rose 17 per cent at 3,60,187 units against 3,07,862 units in 2004-05.

Overall, the domestic automobile industry sales grew 12.8 per cent in 2005-06 at 89,10,224 against 78,97,629 units in 2004-05.

On the exports side, a downturn in the numbers of Maruti Udyog pulled down growth in overseas car shipments to single digits as overseas sales grew 5.9 per cent compared to a high 28.2 per cent in 2004-05. Car exports in 2005-06 stood at 1,70,193 units against 1,60,670 units last year.

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