SIAM's Lowered Auto Sales Forecast For India Worries Steelmakers

by on

TC Malhotra contributes to MetalMiner from New Delhi.

The Society of Indian Automobile Manufacturers (SIAM), the auto industry body representing 46 leading vehicle and vehicular engine manufacturers in India, forecast that Indian car sales, which grew at about 30 percent in the fiscal year up through April 2011, are now expected to grow by just 10-12 percent in 2012.

The revised forecast by SIAM is down from an earlier forecast of 16 to 18 percent. According to the latest data made available by the SIAM, they’ve also lowered overall growth for the auto sector to 11-13 percent from an earlier indication of 12-15 percent.

Car sales grew at just 1.6 percent in June ” the slowest since the slowdown of 2008 ” compared with nearly 31 percent in the corresponding month a year before. This has prompted SIAM to lower its growth forecast for passenger cars in 2011-12.

According to a SIAM report, the passenger vehicle segment grew at 8.77 percent during April-June 2011 compared to the same period last year. Passenger cars grew by 7.30 percent, utility vehicles grew by 5.08 percent and vans grew by 29.28 percent in this period. In June 2011, passenger cars and utility vehicles recorded substantially lower growth, 1.62 percent and 4.36 percent, respectively.

Interest rates, higher fuel prices and an increase in vehicle prices are the reasons for the lower growth, according to the auto industry organization.

Auto-grade steelmakers in the country have also started to feel the pinch of dwindling car sales. Market observers say that the demand for auto-grade steel has slowed down since the beginning of the current financial year. They expect the low demand from auto companies to continue for the next quarter or so.

German car manufacturer Audi, in its recently released annual report, has said that there is a bright future ahead for the Indian automobile industry. The report anticipates car demand in India will grow by more than three million by 2014.

India is home to 40 million passenger vehicles as of 2010, and more than 3.7 million automotive vehicles were produced in India that year, making the country the second-fastest growing automobile market in the world.

SIAM had earlier announced that annual car sales are projected to increase up to 5 million vehicles by 2015 and more than 9 million by 2020. By 2050, India is expected to top the world in car volumes with approximately 611 million vehicles on the nation’s roads.

Analysts say that the key to success in the industry is to improve labor productivity, labor flexibility, and capital efficiency. Having quality manpower, infrastructure improvements, and raw material availability also play a major role. Access to the latest and most efficient technology and techniques will bring competitive advantage to the major players.

Tata Motors leads the commercial vehicle segment in India with a market share of about 64 percent. Maruti Suzuki leads the passenger vehicle segment with a market share of 46 percent. Hyundai Motor India and Mahindra and Mahindra are focusing on expanding their footprint in the overseas market. Hero Honda Motors occupies over 41 percent, and shares 26 percent of the two-wheeler market in India with Bajaj Auto.

SIAM is an important channel of communication for the auto industry with the Indian federal government, national and international organizations. The society actively participates in forming rules, regulations and policies related to the industry.

–TC Malhotra

Leave a Comment

Your email address will not be published. Required fields are marked *