Fuel costs could play ball with SIAM forecast for FY13

India’s passenger vehicles segment will grow 10-12 percent in 2012-13, says the Society of Indian Automobile Manufacturers (SIAM). It has also said that while two-wheelers will grow 11-13 percent, the trucks sector will grow by 9-11 percent. Passenger vehicles grew by just under five percent in the last fiscal year.

Clearly, growth is not going to be as heady as it was in the previous two fiscals. For FY13, CV and two-wheeler growth is expected to be lower than in 2012-13. In CVs, the areas of concern are infrastructure growth and the standstill on JNUURM, which has pushed bus sales. The main thrust in two-wheelers is expected to be rural demand where a bike is typically the first vehicle purchase of the family.

Going forward, how sales pan out will depend on fuel prices. The recent Union Budget indicates the government’s willingness to bite the bullet of fuel (ie diesel) subsidies. For cars, fuel efficiency and interest rates will matter, and only over the former does the auto segment have any control.