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In another sign of a slowing economy, the auto industry once again cut down its growth projections for 2012-13. It now expects vehicle sales to grow 5-7 per cent this fiscal against the revised lower estimate of 9-11 per cent.
The Society of Indian Automobile Manufacturers attributes this to slowing demand, subdued rise in incomes, as also higher vehicle and fuel prices.
SIAM also cut this fiscal’s car sales projection for the second time this year, and now expects growth to be in low singles.
The current projection is now 1-3 per cent lower than the already lowered forecast of 9-11 per cent in July.
Lower than estimated
“Overall, the auto industry’s sales will grow by 5-7 per cent, much lower than the earlier estimate of 11-13 per cent for this fiscal. We don't expect to have a good festival season,” said S. Sandilya, President, SIAM. The cost of ownership of passenger cars is expected to increase by 3-5 per cent on the back of petrol price rise (by approximately 5 per cent) and vehicle price hike (by 3 per cent), according to SIAM. This will further decelerate passenger car segment. Car makers such as Honda, General Motors, and Maruti Suzuki, as also Audi have all hiked prices ahead of the festival season.
Auto Mission Plan
“The $145-billion turnover target of the 2016 Auto Mission Plan (AMP) is unlikely to be met, given the current growth figures. In our estimate, the industry would fall short by 20-25 per cent by 2016, which translates into $34-35 billion,” Sandilya said.
SIAM has approached the Government to extend the AMP’s tenure by another 10 years, to 2026, in the wake of a slowing market.
Commenting on the overall outlook, Sandilya said: “The industry would need to watch interest rates, fuel prices and commodity prices, along with government policy initiatives which may undermine benefit.”
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