 "Vehicle sales to grow 6-9% in FY17: India Ratings")
The auto sector’s fortunes are unlikely to improve dramatically in FY17. While the outlook for the auto and auto ancillary sector is stable, volume growth would continue to languish in single digits. According to a report by India Ratings & Research, the passenger vehicle segment is likely to post domestic volume growth of six to nine per cent year-on-year in FY17, driven primarily by the car segment (8-10 per cent) with lower sales volume growth to be exhibited by utility vehicles (2-5 per cent).
Lower cost of ownership would be the key growth driver for the sector in the new fiscal. In the face of a regulatory issues faced by the diesel vehicles, consumers may favour petrol vehicles over diesel, considering the low price of petrol variants and fall in fuel cost. The agency expects volume growth of utility vehicles to be driven by the launch of competitively priced compact models in FY16 in petrol and diesel variants.
The commercial vehicle (CV) segment is also expected to clock single digit volume in FY17, as volume growth for medium and heavy commercial vehicles moderate to 12-15 per cent levels from almost 19 per cent levels in FY16. Analysts at India Ratings believe the key driver for the segment's growth would be demand for high tonnage vehicles as fleet owners seek to minimise their per ton transportation cost by taking advantage of improved road infrastructure in the country, particularly along the Golden Quadrilateral. The tapering off of growth in MHCV volumes would be on account of depletion of pent up replacement demand (witnessed in the past 18 months) and higher volumes clocked prior to 30 September 2015.
Ind-Ra is of the opinion that that migration of emission standards directly to Bharat Stage VI from Bharat Stage IV and the advancement of implementation date of Bharat Stage VI norms to April 2020 (from April 2021) would cause an increase in development and testing expenses for OEMs in the intervening period. The higher cost of implementing emission control technologies in diesel vehicles could influence a greater number of buyers to opt for petrol vehicles.
The outlook for two-wheelers is downright bleak. Motorcycles are likely to exhibit annual volume growth of two per cent or a contraction of two per cent in FY17, depending on how rural demand behaves. Even in the event of a favourable monsoon, the growth rate would be moderate on account of a high volume base (10.7 million in FY15), says India Ratings. Scooters would continue to show high volume growth backed by urban-centric demand, the growth rate would moderate to 9-11 per cent in FY17.
Lower cost of ownership would be the key growth driver for the sector in the new fiscal. In the face of a regulatory issues faced by the diesel vehicles, consumers may favour petrol vehicles over diesel, considering the low price of petrol variants and fall in fuel cost. The agency expects volume growth of utility vehicles to be driven by the launch of competitively priced compact models in FY16 in petrol and diesel variants.
The commercial vehicle (CV) segment is also expected to clock single digit volume in FY17, as volume growth for medium and heavy commercial vehicles moderate to 12-15 per cent levels from almost 19 per cent levels in FY16. Analysts at India Ratings believe the key driver for the segment's growth would be demand for high tonnage vehicles as fleet owners seek to minimise their per ton transportation cost by taking advantage of improved road infrastructure in the country, particularly along the Golden Quadrilateral. The tapering off of growth in MHCV volumes would be on account of depletion of pent up replacement demand (witnessed in the past 18 months) and higher volumes clocked prior to 30 September 2015.
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Ind-Ra is of the opinion that that migration of emission standards directly to Bharat Stage VI from Bharat Stage IV and the advancement of implementation date of Bharat Stage VI norms to April 2020 (from April 2021) would cause an increase in development and testing expenses for OEMs in the intervening period. The higher cost of implementing emission control technologies in diesel vehicles could influence a greater number of buyers to opt for petrol vehicles.
The outlook for two-wheelers is downright bleak. Motorcycles are likely to exhibit annual volume growth of two per cent or a contraction of two per cent in FY17, depending on how rural demand behaves. Even in the event of a favourable monsoon, the growth rate would be moderate on account of a high volume base (10.7 million in FY15), says India Ratings. Scooters would continue to show high volume growth backed by urban-centric demand, the growth rate would moderate to 9-11 per cent in FY17.