SIAM Cuts Sales Forecast Citing Policy Uncertainties
Market now expected to expand 6-8% this fiscal, slower than 11-12% forecast earlier
New Delhi: India’s top automobile industry body on Friday cut its forecast on passenger vehicle sales for the fiscal year that just started, blaming policy uncertainties for creating a challenging market environment.
The Society of Indian Automobile Manufacturers released the outlook after announcing a 7.24% increase in the sales of cars, utility vehicles and vans for the last fiscal year ended on March 31. The growth was the fastest in five years, but SIAM said it was boosted by deep discounts and demand for new models, even as the market remained sluggish.
It now expects the market to expand 6-8% this fiscal, slower than the 11-12% forecast three months ago. March numbers indicated the industry’s problems, as car sales fell 0.3%. Strong demand for utility vehicles, however, aided total passenger vehicle sales to climb 5.13% in the past month from a year earlier. Consumer sentiment remained weak due to high interest rates and uncertainties over diesel cars on account of ad-hoc policies, SIAM deputy director-general Sugato Sen said. Court actions, such as the ban on large diesel vehicles in the National Capital Region, further complicated the matters. Introduction of an infrastructure Cess in the latest budget was another worrisome point.
“The sector is the highest taxed in the manufacturing sector ... There is only 60% capacity utilisation in the auto industry today … profitability of many car companies is still in the negative today in India,” he said.
Sales of commercial vehicles rose 11.51% in FY16, indicating impro- ving economic activity, while twowheeler volume increased 3.01%, with a recovery in motorcycle numbers in March aiding the growth. Vehicle sales across categories rose 3.78% to nearly 20.5 million in FY16.
Manufacturers dispatched about 2.79 million passenger vehicles from factories in the past fiscal year. The last time sales rose faster was in 2010-11, when the growth was 28.20%.
“The growth last fiscal was mainly because companies have tried to come up with new models, which have been accepted in the market,” SIAM’s Sen said, referring to the pickup in passenger vehicle sales.