Will the Indian Car Market Grow This Year?
The Society of Indian Automobile Manufacturers (SIAM) had recently predicted that the car industry would grow 12-13 per cent during the remaining part of this fiscal. Sadly, though the growth still continues, it is nearly half of what the Indian car industry witnessed last year.
Main Reasons for the Slow Growth
• Car prices have increased. Car prices in India have increased four times in the January-July period in 2010.
• Steel and rubber prices have increased thus forcing auto component suppliers to pass the rising cost burden on to the car makers who are in turn passing it over to the consumers. Cost does make a difference when it comes to sales numbers.
• High base effect from last year will start kicking in.
• BS III emission norms will be implemented across India by October, which may further affect car prices.
• Rising interest rates on car loans.
SIAM's prediction says that around 17,14,925 units may be rolled out in the Indian car market during the financial year 2010-11. The total passenger vehicle sales figure in India is predicted to reach 2,196,791 units in 2010-11 as against 1,949,248 units in 2009-10, up 13 per cent. If this figure is compared with that of last year's sales, 15,26,259 units were sold and a year prior to that (2008-09), 12,20,475 passenger cars were sold in India. This translates into a 25 per cent growth rate.
There are certain elements that drive demand in each segment of cars in the country and SIAM has made prediction for the first time only after taking into account all the significant data. However, SIAM itself feels that the Indian car industry is capable of beating the predictions and doing much better. For now, the automobile manufacturers society feels that the second quarter will do not do well as the first one which did really well. With high sales, the first quarter broke sales records for many manufacturers.
Jan-June 2010 saw the launch of many superb cars that were aggressively priced. The Ford Figo, Chevy Beat, Maruti Suzuki New WagonR, Volkswagen Polo and many other cars including luxury cars were launched appealing to every class in the society. The second half of the year too will see many launches. But, will the sales increase like the first half of the year?
If last year's sales are taken into consideration, automobile sales had picked up during the second half of the year. Compare that to this year's April-June quarter and you'll see that total car sales have increased by 33.43 per cent at 4,33,641 units compared to 3,24,985 units sold in April-June of 2009.
SIAM says that India's commercial vehicles sales may grow by 17-18 per cent at 6,21,681 units this year from last financial year's 531,395 units. However SIAM has considered two-wheelers, three-wheelers and the four-wheeled automobiles in India. Three-wheeler segment will witness the least growth and this will definitely reflect in the total car sales numbers. So, that does not necessarily mean that car sales are going to be very bad.
Questions and Answers
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