The average 30 per cent growth in the Indian passenger vehicle industry over the last six months will no longer be seen from July onwards. The industry is expected to close the current financial year with 12-13 per cent growth over 2009-10 as the base effect tapers down.
According to the annual forecast of the Society of Indian Automobile Manufacturers released on Thursday, passenger vehicle sales in the country will be 21,96,791 units in 2010-11 as compared to 19,49,248 units in 2009-10.
“While the first quarter of the ongoing financial year has witnessed good growth, demand is likely to slow down in the second quarter as high base effect from last year will start kicking in. Moreover, the rising commodity prices, although they have stabilised in the last two-four weeks, and the supply constraints from the suppliers are some of the key challenges for the industry going forward. It is projected that the passenger vehicle industry will end the year at 12-13 per cent higher sales than last year,” said Pawan Goenka, president, Siam said.
“Rising interest rates and possible increase in prices of vehicles when Bharat Stage III norm is implemented across the country by October, are other factors that may impact demand,” he added. While two-wheeler sales are expected to be up 9-10 per cent at 10,287,837 units from 9,368,230 units in 2009-10, commercial vehicle sales in India will grow 17-18 per cent at 6,21,681 units vis-à-vis 5,31,395 units last financial year. Sales of three-wheelers are expected to go up 7-8 per cent at 4,73,693 units in the current financial year as against 4,40,368 units in 2009-10.
“The pent up demand for passenger vehicles is getting fulfilled with several new launches over the last six months. Therefore, it is natural for the industry to now slow down a bit and enter the phase of natural growth for the remaining period of the current financial year,” said VG Ramakrishnan, senior director (automotive practice), Frost & Sullivan.
In fact, eight new models and 11 facelifts launched during the first quarter of the financial year helped boost sales in June as well and the overall automobile sales surged 31 per cent last month at 12,05,990 units as compared to 9,17,645 units in June last yeaWhile commercial vehicles registered the highest growth of 44.1 per cent at 52,211 units as compared to 36,222 units on the back of a buoyant economy, sales of passenger vehicles went up 29.2 per cent at 1,81,810 units in June vis-à-vis 1,40,748 units during the same month last year.
This was led by 17.9 per cent growth in domestic sales of Maruti Suzuki India at 72,812 units, 18.9 per cent growth in sales of Hyundai at 27,366 units and 56.4 per cent increase in sales of Tata Motors at 32,479 units last month.
“The industry had benefited from a good overall macro-economic environment in the first three months of the financial year and this had a positive impact on consumer confidence,” Goenka added.