Last fiscal proved a dream run for most domestic automobile companies, with growth across most vehicle segments in high double digits.
NEW DELHI: Last fiscal proved a dream run for most domestic automobile companies, with growth across most vehicle segments in high double digits.
But the twin factors of rising interest rates and growth being calculated on higher base in 2007-08 have made analysts label the current fiscal as challenging. Their prognosis? Growth rates across the automobile industry (excluding tractors) may average just about 12 %.
The passenger car segment averaged an impressive 26% growth over the last 12 months, helped mainly by excise duty reduction on small cars. But this idyllic growth would be slowing down over the next few months.
Man Financial says passenger car sales are expected to log between 12-14% cent growth this year. Brokerage house Emkay predicts growth of between 10-12%, pointing out that any further increase in interest rates for vehicle finance could have a negative impact car sales, at least in the short term. Even the Society of Indian Automobile Manufacturers (SIAM) has predicted a growth rate of only 15% between April and March 2008.
Two-wheelers are also expected to slow down their sales march in 2007-08, compared to last fiscal (estimated at 12.5%). While Merrill Lynch has predicted a slight slowdown in off-take at 12% this fiscal, SSKI says motorcycles could grow by between 12-15% due to strong demand.
Man Financial, however, maintains the 12-14% growth band for two-wheelers (just like passenger cars) during the current fiscal.
Even commercial vehicle (CV) sector is expected to witness some demand softening, again on account of significantly higher base created during last fiscal.
Man Financial has predicted sales of M&HCV sales to rise 8-9%, while LCVs would fare better at 12-14% growth rates. SSKI, meanwhile, has predicted 13% CAGR in the CV sector industry for the next two years.
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