Auto sector headed for steady growth.

He was addressing a press meet in Mumbai along with Vishnu Mathur, director general, Siam. Analysing India’s automotive growth in Q2 of the current fiscal, Goenka said the first half has seen the highest volumes and growth for all automotive sectors including cars, trucks, two-wheelers and three-wheelers. While PV sales grew 31 percent, UVs grew 20 percent and CVs grew by 41 percent. Three-wheelers grew by close to 20 percent while two-wheelers recorded a 25 percent growth.

Sales in September were the highest for cars and two-wheelers. Goenka said the rise in interest rates had had no impact on retail sales but indicated that if rates were further are increased in the November credit policy, the impact on sales could be adverse.

SIAM, he said, has also revised its overall projections for growth for the current fiscal to 18-20 percent as against the earlier projection of 13-15 percent. Sector-wise, he said that passenger car sales had been buoyed by new launches in the second quarter (30 for all sectors) and in the first half (50). If growth continues over the next four quarters, the auto sector would be back on track to achieving the FY 2015-16 target of $145 billion. Its current estimate is about $80 billion, Dr Goenka added.

With regard to the challenges that industry faces, Goenka said there are continuing capacity constraints, while input prices for rubber have stabilised. Steel prices have begun to increase. To handle capacity constraints, suppliers have opted for second sourcing or re-jigged their production profiles. On the export front, the withdrwal of the scrappage issue have affected exports to the EU.

In H1 of the current fiscal, monthly growth rates have fallen but individual month sales have gone up over year-earlier months, he said. In CVs, Goenka chose to highlight the fact that LCV sales had fallen in Q2 FY10 from 24 to 17 percent and perhaps reflected the fact that the sector had come out of the slowdown much faster than MCVs.

In comparison to other CV markets, Goenka said India’s had grown 59 percent while other nations have grown at 49 percent (Brazil), 44 percent for Germany and 39 percent for China. Going forward, sales in the remaining two quarters in India are expected to be moderate as last year’s growth was high, Goenka predicted. Overall, he said the numbers for the key auto sectors could be in the region of 2.4 million passenger cars, 600,000 CVs, 11 million two-wheelers and 50,000 three- wheelers.

The net result of good growth is that India’s automotive sector is now positioned at seventh worldwide, just behind Brazil which is about 30 percent bigger than India’s., Going forward, India is well on course to attaining the sixth position if current growth continues