Boston, MA -- (ReleaseWire) -- 06/06/2014 -- According to the Society of Indian Automobile Manufacturers (SIAM), total auto sales - including passenger vehicles and commercial vehicles (CVs) - declined 9.8% in FY2013/14 (April-March), to 3,134,204 units. This was the first contraction in the market since 2008.
We maintain a cautious outlook for FY2014/15 and forecast 3.3% growth in total auto sales. As we previously highlighted, the cut in vehicle excise duty implemented in February will not be sufficient on its own to spur weak demand in the market ( see 'Excise Tax Cut Not Enough On Its Own', March 6) as consumer sentiment remains poor due to weak economic growth. This was corroborated in the April car sales figures of many automakers, which reported continuing y-o-y declines.
While all eyes are on the outcome of the federal elections, which conclude later in May, we do not see a sharp turnaround in the auto sector even if the pro-business opposition Bharatiya Janata Party comes to the helm of the new government. As our Country Risk team has highlighted, hurdles to foreign direct investment (FDI) will remain even with the potential for a business-friendly election outcome ( see 'Hurdles To FDI To Linger Even After Elections', March 25), which we believe will be a headwind to the CV segment.
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Additionally, our Country Risk team has also pared back its dovish expectations on Indian interest rates ( see 'Hawkish And Reform-Centric RBI Less Likely To Cut Rates', April 2). We see tighter credit continuing to weigh on auto sales as consumers and businesses are starved of affordable financing to purchase new vehicles.
A dominant theme for 2014 could be the comeback of petrol car models. Diesel vehicles, which have been popular in the past few years, have seen their share of new sales decline from 58% in the first eight months of FY2012/13 to 54% in the first eight months of FY2013/14. As diesel become more expensive (with pump prices rising every month as the government seeks to reduce subsidies), its cost advantage...
The India Autos Report features the latest data and forecasts covering production, sales, imports and exports.
Business Monitor International (BMI)'s India Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the automotives market in India.
- Benchmark BMI's independent automotives industry forecasts on India to test other views - a key input for successful budgetary and planning in the Indian automotives market.
- Target business opportunities and risks in the Indian automotives sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in India.
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