After reporting a 27.3 per cent rise in domestic automotive sales in the first half of the current financial year, the Society of Indian Automobile Manufacturers (Siam) expects growth in the domestic market to close at 18-20 per cent for the entire year. Last year, the industry had witnessed 26.4 per cent growth.
The apex automotive body said it had revised the annual estimate upwards from 12-15 per cent, after gauging the robust growth the industry reported in the first six months, when customers bought 1.17 million passenger vehicles.
At estimated sales of 2.4 million passenger vehicles, which would be 23 per cent more over last year’s sales of 1.94 million units, it would perhaps make India the sixth largest automotive market in the world, overtaking Brazil.
“The performance of the industry has exceeded our expectations. We have, therefore, revised the year-end estimates upwards. The sales are showing that the underlying growth momentum is strong,” said Siam president, Pawan Goenka said.
High local demand is forcing some manufacturers to add extra capacities while pushing the existing facilities to work overtime, especially to meet the surge expected in the just-begun festive season. Maruti Suzuki, which has a 44 per cent share in the car market, is running its plants at nearly 110 per cent capacity. It sold 520,000 units during the six-month period ending September.
Mumbai-based Tata Motors and Delhi-based Hyundai Motor India, the third-largest and second-largest automakers, respectively, have also reported 43 per cent and 19 per cent growth in sales, respectively.
Less growth in H2
According to car makers, growth in the second half of the current financial year is expected to be moderate, as the high base effect of the previous year will also come into play. Sales in the second half of last year were very strong, compared to the first half of the previous year.
In addition, companies have also signalled that any further increase in interest rates on vehicle loans could start having an effect on retail demand. Rising commodity prices and lower export demand, particularly in Europe, could also have an impact.
Siam is also expecting Indian consumers to buy a total of 11 million two-wheelers during the year, a jump of 17 per cent over the previous year, when 9.37 million units were sold.
