SIAM ups earlier projection,says auto sales growth to accelerate to 20 pc

The Society of Indian Automobile Manufacturers (SIAM) has revised the industry growth rate upwards for this year.

The Society of Indian Automobile Manufacturers (SIAM) has revised the industry growth rate upwards for this year. The association on Friday said it expects the automobile industry to grow at 18-20 per cent this year as against the earlier prediction of 13-15 per cent. This accelerated growth outlook comes on the back of strong economic growth,high consumer confidence,infrastructure spending,rural employment,stable auto finance rate and new launches experienced by the industry.

SIAM president Pawan Goenka said,The performance of the industry has exceeded our expectations. From the 15th position in the world,India today stands at the seventh position in the global vehicle market. The industry is coming down to a long-term steady double digit growth.

He added that the country has the potential to surpass the Brazilian market to become the sixth largest in vehicle market in the world. Currently,China is the largest followed by Japan,US,Germany,South Korea,Brazil and then India.

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SIAM expects passenger vehicles (PV) sales to touch 2.4 million,commercial vehicles (CV) to reach 6 lakh units,three-wheelers at 5 lakh units and 11 million units for two-wheelers,for this year.

The industry body expects the Indian automobile industry to end at $80 billion this year and expects it to become $145 billion much before its target of 2015.

However,the association expressed concern over the hardening steel prices and interest rates going ahead. It also said the supplier constraint still continues to exist though the gap between demand and supply mismatch has reduced and is less than 5 per cent. Further,the fall in exports to Europe also remains a concern for the automakers which highly depend on the said market.

The industry can absorb an increase of around 50 basis point increase in the interest rates but anything more than that will impact the industry adversely, said Goenka,adding that the increase in steel prices in the last one month is a matter of concern. Moreover,the growth during the second half of the financial year is expected to remain moderate with the low base affect to wears off.

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The third and fourth quarters of this financial year are expected to witness moderate growth as low base affect wears off. One should remember that we are comparing it to third quarter of last year which saw the best growth for the auto industry, he said.