Saturday, April 12, 2014
By Kamal Swami
Decline in excise duty fails to boost auto industry
Passenger vehicle sales in India slumped 6 per cent in 2013-14, marking the biggest rout in a decade. Although the government had announced a 4-6 per cent cut in excise duty in February, it failed to lift the mood in a market weighed down by rising costs and higher interest rates. The auto industry, however, pegged hopes on a new, stable government reviving demand. Data released on Friday by the Society of Indian Automobile Manufacturers (Siam) showed sales of passenger vehicles — including cars, sports utility vehicles and vans — fell to 25.03 lakh units in the year-ended March from 26.66 lakh units in the previous year. Car and SUV sales fell 5 per cent each to 17.86 lakh units and 5.25 lakh units. But van sales registered the biggest decline of 20 per cent at 1.90 lakh units.
Siam did not give a growth forecast but said it hopes the sector will record positive growth in the new fiscal. "We are not expecting any huge spurt in sales, but some moderate growth is expected to happen for sure," said Vikram Kirloskar, president at SIAM.Car makers, too, reflected a positive sentiment. "Following the cut in prices after the reduction of excise duty and with strong performance in the compact segment, we registered a 3.4 per cent growth in March, indicating a build-up of positive momentum in the market," said Rakesh Srivastava, senior vice-president of sales and marketing at Hyundai Motor India Limited. "While the challenging times are expected to continue, going forward, we should see positive growth on the strength of new models, increase in contribution of sales of petrol vehicles and rural sales."
The overall industry, including cars, two-wheelers, and commercial vehicles, grew 3.53 per cent to 1.84 crore units, largely helped by the two-wheeler segment that was propelled by strong demand for scooters. It was the only positive segment in the entire auto industry and grew 7.31 per cent to 14.80 lakh units. Commercial vehicles, considered the barometer of the economy, was the worst hit with sales declining 20 per cent to 6.32 lakh units.
Three-wheeler sales dipped 11 per cent to 4.79 lakh units. Siam is also hoping that the ongoing elections will throw up a stable government and that, in turn, will revive growth. "We are hopeful that a new, stable government would unite the economy knots and bring in some positive policy changes," Kirloskar added.
Source: Economic Times