Passenger car sales are set to grow at their slowest pace in the domestic market in the last nine years as weak consumer sentiments triggered by high interest rates and fuel prices continued to impact off-take into the third quarter of the financial year.
In December, passenger car sales in fact declined by 12.5% to 141,083 units. This is the steepest drop since August last year when car sales had fallen by 18.56%. S Sandilya, president, Society of Indian Automobile Manufacturers (SIAM) said, “Negative sentiments among consumers at the entry-level due to high interest rates and fuel prices are hurting sales.”
The industry body today revised downwards growth forecast for passenger cars to 0-1% for FY13, from the earlier estimate of 1.3% made in October last year. To rev up growth SIAM has made a submission before the government to cut excise duty on larger cars to 22% from the current 27% and has demanded an extension of benefits outlined under the Automotive Mission Plan (AMP) for another 10 years till 2026.
“Going by the current trends, we do not think the industry will be able to recover in the fourth quarter unless the government extends support”, added Sandilya. SIAM has recommended that excise duty on small cars and two-wheelers be cut to 10% from the current 12%.
Overall, SIAM held passenger vehicles sales are likely to grow by 7-10% in this fiscal driven by demand for diesel-powered utility vehicles.
The industry body also cut its growth forecasts for two-wheelers to 3-5% (from 5-7%) and commercial vehicles to 0-2% (from 3-5%) citing weak macro-economic conditions.
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| FY13 forecasts made in April 2012 (%) | Revised FY13 Forecasts made in July 2012 | Re-revised FY13 forecasts made in October 2012(%) | Actual Growth Apr-Dec 2012 (%) | Re-revised FY13 forecasts made in January 2013 (%) | ||
| Passenger Vehicles | 10-12 | 11-13 | 8-10 | 8.37 | 7-10 | |
| Commercial Vehicles | 9-11 | 6-8 | 3-5 | 0.74 | 0-2 | |
| 3-Wheelers | 5-7 | 0-2 | 0-2 | 4.96 | 4-7 | |
| 2-Wheelers | 11-13 | 11-13 | 5-7 | 4.09 | 3-5 | |
| Overall Industry | 10-12 | 11-13 | 5-7 | 4.57 | 3-5 |
According to data released by SIAM, passenger vehicle sales declined by 1.13% to 206,865 units in December. Industry growth was dragged down by Tata Motors and Hyundai which reported a decline of 28% and nine% in sales in the domestic market last month.
While scooter sales went up by 6.40% to 232,343 units last month, demand for motorcycles increased by a modest 4.83% to 844,113 units. Sales of commercial vehicles, however, dipped by 13% to 62,786 units as against 72,166 units sold in the same period in 2011.
Overall vehicle sales across categories rose by 2.77% to 1,451,517 units. SIAM expects volumes to pick up the last quarter.