The automobile industry in India will likely show a new high when the numbers for October are released for public consumption. Earlier, in September, industry body Siam had revised its growth targets to double digits as against an earlier projection of 4-5% growth. With a conservative growth of 10%, the total automobile sales in the country are expected to be 1,06,95,730 units in 2009-10?the highest ever in the history of the India automobile industry?as against 1,01,23,988 units in 2006-07 when the sales crossed the 10 million mark for the first time or 97,23,391 units in the last financial year.
This is indeed a reason for automobile players to cheer, more so when sales in the European Union are still growing at an average of 3-5% a month despite the scrappage incentives being doled out by various governments.
However, what is going unnoticed is that the bare minimum of 10% growth in the current financial year is not anything great considering that sales were flat in 2008-09.
This invariably means that the 10% growth of 2009-10 would really be seen over a two year horizon. For a country where penetration level is as low as nine cars per 1,000 people as against 500 cars per 1,000 people in the US, this is certainly moderate growth and doesn?t call for a celebration.
As commodity prices are hardening and fuel prices continue to be high, it remains to be seen whether the growth momentum of the last few months will sustain over the second half of this financial year as well.
In any case, the focus of the industry players should be to continuously improve and upgrade their products and bring about an increase in efficiency in order to be globally competitive.
And while car manufacturers in India do their bit by launching new products and upgrading the existing ones, the Centre might also have to play a bigger role by giving incentives for buying new cars, by encouraging users too discard their older ones, as is being done in government funded programmes in Europe and in the US.
yogima.seth@expressindia.com