April auto sales suggest tough year ahead

This is going to be a tough fiscal for the auto sector if the SIAM (Society of Indian Automobile Manufacturers) April data are any indication.

On the face of it, a 22.8 per cent growth in overall sales at 1.33 million units (1.09 million) is not a bad start except that the real numbers came from two-wheelers (up 26.44 per cent at 1.04 million units) while passenger cars were a bare 13.18 per cent at 1.63 lakh units. Utility vehicle sales were up 6.25 per cent (26,481 units) while vans were a healthier 37.39 per cent (18,298 units).

Commercial vehicles

As for commercial vehicles, April sales grew 8.22 per cent to 53,202 units thanks largely to light CVs (14.43 per cent). Medium & heavy CVs literally crawled with 0.70 per cent. However, three-wheeler goods carriers grew by 16.62 per cent while their passenger siblings were down by 2.11 per cent.

2-wheeler momentum

The real growth came in two-wheelers with mopeds, motorcycles and scooters up by 15.68 per cent, 23.39 per cent and 48.06 per cent each. Indications are that the momentum will continue for the rest of the fiscal though manufacturers are expected to face a tough challenge in implementing price hikes.

Carmakers are not too hopeful about any improvement in the situation thanks to the liquidity crunch and expensive borrowings. Further, with an imminent increase in auto fuel prices in the coming days, this could dampen sentiment further.

What is emerging rather clearly is that the 30 per cent heady growth seen in 2010-11 is unlikely to see an encore in the coming years. At best, this fiscal will see a 12 per cent increase.

Incidentally, another piece of good news in April came from export numbers which were up nearly 30 per cent at 2.61 lakh units.

While passenger vehicles grew 12.66 per cent, two-wheelers were up 32.77 per cent. Exports of CVs and three-wheelers increased 36.01 per cent and 36.95 per cent respectively.

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