SIAM Projects Modest Sales Growth Of 7-9% In PVs During FY 2017-18

Despite clocking record domestic sales of 3 million units (at 9.23 per cent growth) in the PV segment during FY 2016-17, the Society of Indian Automobile Manufacturers (SIAM) is anticipating a modest sales growth of 7-9 per cent in FY 2017-18.

While addressing the press conference, SIAM Deputy Director General Sugato Sen told reporters, "We are not expecting a double digit growth with the minimum rate at 7 per cent and the maximum rate at 9 per cent in the coming fiscal. The rates are determined keeping the high base effect in the just concluded financial year. Having said that, the growth momentum will be sustained as there is positive shift in consumer sentiments coupled by country's economic growth and development. Furthermore, positive factors like lower borrowing costs, better Rabi output, GST implementation, Pay commission, pent-up demand after demonetization and a mild budgetary support to will give a fillip to consumption growth in 2017-18."

However, he added a rider that rising commodity rates, high vehicle finance rates, and volatile oil prices may act as a dampener to the upward sales trajectory. SIAM has also expressed reservations about ad hoc changes in the policy environment (like diesel vehicle above 2,000cc and BS-III vehicles) by Supreme Court and NGT which could hit the bottomlines of many multinational companies.

Going by SIAM's estimates, sales during the ongoing financial year is expected to be in the range of 3.3-3.4 million units which is just 10 per cent of China's annual sales at 30 million units. SIAM maintained that total domestic passenger vehicle sales stood at 30,46,727 units as against 27,89,208 in the previous year.

Likewise, SIAM is anticipating a moderate growth of 9-11 per cent in the two-wheeler segment on the back of huge thrust in country's rural infrastructure. The total commercial vehicle segment is expected to grow by 4-6 per cent while that of three-wheeler sales is likely to post a low single digit growth, as per SIAM's projections.

"There has been some impact (in the two-wheelers) due to demonetization especially in the non-urban cities. But that will be mitigated with the cash availability improving in these cities. Scooter sales will definitely be in double digits. All eyes are also on the monsoons in the coming months. Commercial Vehicle sales will be marginally higher in single digits," Sen added.

Talking about the sales figures for the previous financial year, Sen maintained, "The industry has created a milestone by posting the highest sales of passenger vehicles, utility vehicles, motorcycles and scooters. In the PV segment, we have achieved the 3 million sales mark for the first time thanks to overwhelming response to utility vehicles."

It is to be mentioned that Maruti Brezza, Hyundai Tucson, Honda B-RV were some of the new launches joining the leagues of Renault Duster, Ford EcoSport, Mahindra XUV 500, etc. which are already available in the market. Total Industry Volumes in the UV segment were up by nearly 30 per cent at 761,997 units vis-à-vis 586,576 units in the previous fiscal.

Talking to reporters, SIAM Director General Vishnu Mathur, said, "The market dynamics are changing rapidly as people are switching over to UVs from conventional sedans and hatchbacks and I foresee a similar trend during this fiscal too. The industry has been able to withstand all kinds of headwinds like demonetization, diesel vehicle ban (in NCR), cessation of BS-III vehicle registration (from April 1). Going forward, the industry will be able to tackle any similar challenges like BS-VI emission norms implementation, etc."

When BW Businessworld queried about the upcoming GST implementation and its impact on the automobile industry, Mathur stated, "We expect the GST rate to be fixed at 28 per cent which was determined earlier. Though the rates too high as compared to the current excise duty, it is equivalent to the aggregate rates after including other inter-state taxes are levied on the product. So we have to see how things pan out in the long term."