SIAM Slashes Growth Forecast From 9-11% To 1-3% For Cars

Automobile industry body SIAM (Society of Indian Automobile Manufacturers) today announced the sales figures for September, marking a heavy decline in September sales. SIAM also revised its growth forecast for car sales from 9-11 per cent to 1-3 per cent. Earlier this year, SIAM had cut forecasts from 10-12 per cent to 9-11 per cent. The further revision though shows the kind of gravity behind the current market conditions.

Though automobile sales in India have been witnessing a slowdown since the beginning of FY12, the situation has been engraved since the initial months of FY13. The entire industry has been facing issues due to increasing fuel prices, high interest rates, low industrial and agricultural output, delayed monsoons and sluggish macroeconomic conditions.

In accordance to current industry trends, the only segments that have been outperforming are Utility Vehicles (UV), Light Commercial Vehicles (LCV) and Scooters. On the other hand, Medium & Heavy Commercial Vehicles (M&HCV) has been consistently posting a decline in sales volumes and Passenger Cars and motorcycles have been rather sluggish. With this, SIAM also cut the forecast for motorcycle sales from 11-13 per cent to 5-7 per cent and for Commercial Vehicles from 6-8 per cent to 3-5 per cent.

Overall domestic sales for September 2012 declined by 9.43 per cent over September 2011. These figures highlighted the situation of two-wheelers, the segment that was so far, relatively shielded from demand issues. Motorcycles de-grew by a whopping 18.85 per cent in September 2012 over the corresponding period in the previous year. This situation was anticipated having looked at the sales figures for Hero Motors, Bajaj Auto and TVS Motors which we covered in greater detail in our article named Two-Wheeler Sales Skid In September.

While overall sales have been facing a massive slowdown since the last few months, automobile manufacturers had been increasingly looking forward to the start of the festive season for a revival in sales and a reversal in trends. The third quarter is usually the best selling for the industry and a delayed start in the festive season is likely to affect sales data. It stands true that the quarter is the best selling in the year and that sales would be higher but seeing a significant change YoY is highly doubtful, considering the fact that not much has changed in macro factors.