Indian automobile industry’s sales grew by 31 percent in 2010 (calendar year), an industry chamber said Tuesday, adding the government should maintain the current exercise duty structure on small cars to boost demand in the current year.
Releasing the robust sales growth data of 14.82 million units as against 11.32 million units registered in 2009, the Society of Indian Automobile Manufacturers (SIAM) said that the growth was due to increasing dispensable incomes, low interest rates and increase in sales base at par with the pre-recession era.
“Sales of passenger vehicles segment grew by 31.34 percent, commercial vehicles segment by 45.24 percent, three-wheelers by 22.03 percent and two-wheelers by 30.51 percent,” said SIAM.
Passenger vehicle sales grew by 31.34 percent and stood at 2.38 million, including 1.87 million passenger cars, 312,953 multi-utility vehicles (MUVs) and 202,834 multi-purpose vehicles (MPVs).
According to SIAM, other segments like two-wheelers and three-wheelers too showed impressive sales growth of 22.03 percent and 30.51 percent, respectively.
In terms of exports, the industry clocked a sales of 2.21 million with 34.02 percent growth for last year as compared to 1.65 million in 2009.
SIAM president Pawan Goenka asked the government not to increase the current duty structure of 10 percent on small and compact cars, as the cost increase will ultimately be passed on to consumer, thus effecting sales in 2011.
“Change in excise will be passed on to the consumers. Let it remain at 10 percent and not increased to 12 percent,” Goenka said.
According to him, the auto-industry contributed 86 percent more excise duty than last year, while overall, the sector contributed 26 percent of the total duty earned by the government.
During the downturn of 2008-09, the government provided stimulus package to the industry where excise duty on small and compact cars was reduced to 8 percent from 12 percent. Later the duty was increased to 10 percent in 2010-11 budget.
A hike in exercise rates would increase the prices of automobiles furthers, as most car makers are already on the verge of passing on rising input costs to the consumers.
Recently some auto-companies like Volkswagen and General Motors raised prices on their products, while other auto-companies have also indicated to do the same due to inflationary pressures on input cost.
Sales numbers for the current fiscal year in the period of April-December also reported good growth of 28.68 percent – 11.35 million units as against 8.82 million units in the corresponding period of 2009.
Meanwhile April-December sales for passenger vehicle segment grew by 31.38 percent and stood at 1.80 million as compared to 1.36 million units in the same period of 2009.
“Passenger cars grew by 32 percent (1.41 million units), while utility vehicle grew by 20.82 percent (233,350 units) and multi-purpose vehicles by 50.58 percent (156,525 units),” SIAM said.
SIAM added that the April-December period also witnessed a 28.21 percent increase in the sales of two-wheeler segment with the sales of 8.69 million units as against 6.77 million in the same period of 2009.
Earlier, the auto industry clocked 10 million passenger vehicles sales in the period between April-November as against 7.8 million in the same period of 2009.
Analysts predict the sales momentum to continue in 2011, with some expecting growth of 20-25 percent in the passenger vehicle segment alone.
“I expect a fast growth pattern in the Indian auto-sector with passenger car segment growing at 20-25 percent, two-wheeler segment growing at 12-15 percent and truck segment at 15 percent for 2011,” Amol Bhutada, automobile sector analyst for Elara Securities, told IANS.
The sales number may favour the auto-industry in 2011, the auto companies will face a major challenge in the form of rising input costs, shortages of components and will have to walk a tight rope between protecting margins and hiking prices of vehicles.
