We should get back to some growth for cars, but we feel the first two quarters will be tough and things will get better only after. Predictions of a 6.5% GDP growth, revitalising stuck infrastructure projects and a drop in petrol prices by R4-5 will help push demand, Vishnu Mathur, director-general, SIAM, said. The last time car sales fell as sharply was in 2000-01 (7.73%).
A continuation of the strong demand for diesel vehicles is expected to push utility vehicle (UV) sales, boosting the total passenger vehicle (PV) segment (includes cars, vans, UVs) by 5-7% in FY14. This will be a similar trend to the last fiscal when despite car sales being in the red, a 52% growth in UV volumes helped total PV sales rise 2.15%.
Two-wheeler growth is expected to be 6-8% in FY14, led by a strong demand for gearless scooters. This is compared to a 2.90% rise in volumes in FY13, where bike sales had been flat but scooter volumes were up 14.24%.
Meanwhile, commercial vehicle (CV) sales are expected to improve after a very slow year, especially for medium and heavy CVs. Latent demand in the market, growth in economic activity like mining and a 1% drop in excise duty in truck/bus chassis announced in the Budget this February are expected to boost total CV demand by 7-9% in FY14, with bus sales also getting a push on the back of the new purchases by state under the JNNURM II scheme. In FY13, CV sales fell 2.02%, led by a 23.18% drop in medium & heavy CV volumes.
The situation was bad across segments in the last fiscal. In two-wheelers and CVs, growth is lowest since 2008-09. We think many logistics firms who had postponed purchases will return to the market, Sugato Sen, senior director at Siam said.
In March, volumes were down across the industry with a cumulative decline of 7.76% (14.86 lakh units). Car sales in the month fell 22.51% at 1.80 lakh units, while total PV volumes dropped 13.01% at 2.56 lakh units. Two wheeler sales fell 6.96% at 11.01 lakh units, while CV volumes were down 6.04% at 84,956 units.