Auto industry expects some traction in FY15

Written by fe Bureau | New Delhi | Updated: Apr 12 2014, 09:38am hrs
After two years of tepid sales, the auto industry is looking forward to a revival in FY15 with car, utility vehicle, two-wheeler and light commercial vehicle (LCV) volumes expected to post moderate growth, industry body Society of Indian Automobile Manufacturers (SIAM) said. In FY14, two-wheelers were the only segment to record growth. everything else remained in the red.

After the general elections, it is expected that consumer sentiment could get a boost while pent-up demand and incentives, such as the recently announced excise duty cuts, could drive demand. However, the medium and heavy CV segment may take a bit longer to secure a full revival as key drivers, such as mining activity and infrastructure, are yet to pick up.

Vishnu Mathur, director-general, Siam said, We have been cautious in our outlook for FY15, but we definitely expect some growth. It will not be like last year. We are hopeful that the mining ban will be lifted. When the new government comes, the infrastructure projects will have to be activated and industrial production has to improve.

The optimistic outlook comes on the back of encouraging m-o-m growth in March. Passenger vehicle (PV) sales in March (1.71 lakh units) rose 9% over February though on a y-o-y basis, they remained in the red. Commercial vehicle sales (64,101 units) were up a sharp 34% on an m-o-m basis, but down 24% y-o-y. Two-wheeler volumes (13.34 lakh units), however, were up strongly both on m-o-m and y-o-y.

In March, PV market leader Maruti Suzuki recorded a 5% drop in sales, largely due to last years high base, while rival Hyundai saw a 3.4% rise. M&M posted an 11% drop in sales. Honda recorded strong 83% growth on the back of successful models like the new City and Amaze sedans, though Toyota Kirloskar saw a 58% drop in volumes due to a a labour strike at its two plants near Bangalore. Tata Motors saw volumes dip 29%.

In two-wheelers, Hero MotoCorp saw 12% growth in monthly volumes while erstwhile rival Honda Motorcycle saw a 56% jump. Bajaj Auto saw sales drop 6.40%.

Meanwhile, in CVs, Tata Motors saw a 36% drop in volumes in the month while Ashok Leyland saw sales dip 32%.

Rakesh Batra, partner & national leader, automotive practice, EY, said, Apart from the economic slowdown, CV demand has been negatively affected by a slowdown in industrial output, a gradual rise in diesel prices, a slowdown in new infrastructural projects, and a ban on mining in certain states. The medium and heavy truck segment has been hit particularly hard and witnessed a decline of 27.0% during the fiscal year. This is despite truck manufacturers, with average excess capacity of more than 40%, already offering discounts to the tune of 20-25%.