It was like a cruise on an expressway with no traffic and potholes for the Indian automobile industry in fiscal 2010-11. A healthy 26.17 per cent growth in total vehicle sales during the year and the prospects of becoming the world’s sixth largest automobile market overtaking Brazil sounded pretty reassuring.
Yet, the robust economic growth, more focus on rural areas and new model launches, which all helped in driving sales up last fiscal, are not going to be enough to sustain a high growth rate this financial year, cautioned the Society of Indian Automobile Manufacturers (SIAM).
In the wake of rising interest rates, increasing commodity prices resulting in costlier automobiles and a high base effect, the industry body forecast that in 2011-12 the automobile sale growth rate will be down to 12-15 per cent. According to figures released by SIAM, total vehicles sales in India in FY’11 stood at 1,55,13,156 units compared to 1,22,95,397 units in the previous financial year.
“We have ended the year on a reasonably high note. We have reached a very, very strong base after consistent good growth in the last six quarters,” SIAM President Pawan Goenka said.
He said a variety of factors, including good GDP growth, higher spending on infrastructure development, strong consumer confidence, government’s focus on rural areas, moderate price hike by the auto makers despite steep rise in commodity rates and introduction of new models helped the industry register the gains in the last fiscal.
There were 24 new launches in the passenger vehicles segment last fiscal. For the two-wheelers, it was 16. Besides, passenger vehicle and two-wheeler industries saw 40 and seven refreshed versions respectively.
Talking about the outlook for 2011-12, Mr. Goenka observed: “We expect the growth for the industry to moderate and settle down at around 12-15 per cent this year. This year, we hope to overtake Brazil and become the number 6 automobile market in the world.”
The main reason for the predicted moderation in the growth rate is the ever increasing interest rates on auto loans, which is touching nearly 15 per cent in passenger vehicles and 19 per cent in commercial vehicles. Moreover, commodity prices increased by 8-10 per cent and it is expected to remain the same this fiscal too.
“The ability of the industry to absorb hike in commodity prices may not be as high as it was last year and hence would be passed on to consumers,” Mr. Goenka said.
Buying vehicles will thus become a costly affair this fiscal. Already in the beginning of this new financial year, companies such as Maruti Suzuki India and Tata Motors have hiked prices.
In 2009-10, domestic auto sales were driven equally by all the segments. Passenger car sales rose by 29.73 per cent to 19,82,702 units from 15,28,337 units in the April-March period of the earlier fiscal.
SIAM said market leader Maruti Suzuki’s sales during last fiscal jumped by 26.24 per cent at 9,66,447 units, while its rival Hyundai Motor’s sales increased by 13.95 per cent to 3,58,904 units. Tata Motors witnessed a rise of 27.21 per cent at 2,56,202 units.
On the total two-wheeler front, sales in FY’11 grew by 25.82 per cent at 1,17,90,305 units compared to 93,70,951 units in FY’10. Motorcycle sales were up 22.86 per cent at 90,19,090 units against 73,41,122 units in 2009-10. The country’s largest bike maker Hero Honda’s sales rose by 14.73 per cent at 49,26,390 units. Bajaj Auto saw its sales climbing by 35.52 per cent to 24,14,603 units in FY’11.
Scooter sales during the year jumped by 41.79 per cent to 20,73,797 units from 14,62,534 units in the previous fiscal. Commercial vehicle sales increased by 26.97 per cent to 6,76,408 units from 5,32,721 units for the previous fiscal.
Dwelling on the forecast, SIAM said passenger vehicles as well as passenger car segments would grow at the same pace of around 16-18 per cent. Utility vehicles would surge by 12-14 per cent, while the two-wheeler industry is expected to witness an increase of 12-14 per cent over last fiscal, according to Mr. Goenka.
The commercial vehicle segment is likely to rise by 14-16 per cent. While light commercial vehicle would rise by 18-21 per cent, medium and heavy commercial vehicles’ sales are expected to be up by only 10-12 per cent. As for the three-wheeler segment, sales are likely to see a surge of 9-11 per cent.
As far as exports are concerned, overseas shipments from India grew at a robust 29.64 per cent in 2010-11 riding on two-wheelers and commercial vehicles despite a sluggish demand from Europe, one of the main markets for small cars.
According to the SIAM figures, total exports from the country stood at 23,39,333 units in last fiscal compared to 18,04,426 units in the year-ago period.
During the fiscal, commercial vehicles and two-wheelers witnessed good growth in exports. “The only low was the passenger vehicle segment, mainly because of slow recovery of the European market,” Mr. Goenka said.
After the slowdown of 2008-09, many countries in Europe had offered incentives in 2009-10 to customers for buying new cars in exchange of their old ones to help the auto industry. While sales picked up with the incentives, it has again dropped after the funds for the scheme dried up.
India’s total passenger vehicle exports during last fiscal were up by a mere 1.64 per cent at 4,53,479 units as against 4,46,145 units in the previous fiscal. Passenger car exports touched 4,47,403 units against 4,41,709 units in the previous year, up 1.29 per cent.
In 2010-11, India’s largest exporter Hyundai Motor saw a decline of 18.41 per cent at 2,33,069 units. Domestic market leader Maruti Suzuki was a distant second, registering 6.93 per cent fall in overseas sales.
However, export growth in the last financial year was robust in the two-wheeler category, which registered 35.04 per cent rise at 15,39,590 units as against 11,40,058 units in the previous financial year.
The surge in two-wheeler exports was led by Bajaj Auto and TVS Motor Company with sales of their motorcycles and scooters in various overseas markets. Bajaj Auto’s overseas two-wheeler sales rose by 34.11 per cent to 9,72,437 units from 7,25,097 units in 2009-10. TVS Motor Company registered a rise of 38.52 per cent at 2,29,132 units as against 1,65,414 units in FY10.
Domestic market leader Hero Honda saw its bike exports increase by 36.20 per cent at 1,33,063 units against 97,699 units in the previous fiscal.
Commercial vehicle exports also registered a very robust growth of 69.51 per cent during last fiscal at 76,297 units, compared to 45,009 units in 2009-10. While light commercial vehicles saw an export jump at 91.28 per cent at 47,025 units, the medium and heavy commercial vehicles segment’s overseas sales grew 43.31 per cent at 29,272 units in 2010-11.
SIAM also disclosed that three-wheeler exports rose by 55.86 per cent to 2,69,967 units from 1,73,214 units in the previous fiscal.
- PTI Economic Service
