The Hindu Business Line : Auto sector bracing for single digit growth: SIAM

Hyderabad, Dec. 3 With the impact of the economic slowdown increasing, the country’s automotive sector is likely to close the year with a single digit growth, according to industry experts.

While the automotive sector registered a growth of about 12-15 per cent in the last few years, the Society of Indian Automotive Manufacturers (SIAM) had predicted a compounded annual growth rate (CAGR) of 12-14 per cent from 2006 through to 2016.

“We are yet to compile November numbers. However, given the current market conditions and data coming out from various players in the auto sector, it is likely that the year will end in single digit growth,” according to the Director General of SIAM, Mr Dilip Chenoy.

Speaking to Business Line, Mr Chenoy said the commercial vehicles’ segment, including three-wheelers, has started declining. Sales of passenger cars, too, have been impacted in the last few months.

“The first half numbers showed that there were signs we would witness a growth of about 10 per cent. But given the current trend and possibility of this continuing as we enter 2009, we will be happy if we manage a high single digit growth,” Mr Chenoy said.

Macro Conditions

Echoing a similar view, Ms Vaishali Jajoo, auto sector analyst at Angel Broking, said there are enough indicators to show that the current trend of slowdown will continue over the next 6 to 8 months. Demand and sales are linked to macro economic conditions.

While the last year closed with total sales volume of 1.36 million, general expectation was a growth of about 12 per cent. Given the current market pointers, this will be 4 to 5 per cent. In some segments, it will be lower and some may reflect a flat trend.

Providing auto sector update, she said that the November numbers reflect steep decline mainly due to high inventory build up by dealers of four-wheelers and two-wheelers.

This had meant production cuts by some manufacturers. Therefore, volumes are under pressure as reflected in sales numbers.

Discounts on cards

December is the time to scout for value buys in the automart. As automakers are faced with slowing down sales on one side and piling up inventories at dealer networks, they are keen to achieve targets for the quarter.

During the month, while most companies come up with specials offers and incentives, buyers tend to stay away as they look at buying a new car in next year.

For instance, Ford India is offering discounts on its popular sedan Fiesta—both petrol and diesel variants for a limited period. In the case of petrol, the discount goes up to Rs 90,000 and Rs 50,000 for diesel variants.

Maruti, Tata Motors, Hyundai are also offering discounts.

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