Lower fuel prices and softening of interest rates saw rise in car sales in India by 4.99 percent in 2014-15 after falling for two consecutive fiscals. Bulk of this growth was seen in the July-September quarter, says Vikram Kirloskar, president, Society of Indian Automobile Manufacturers (SIAM) in an interview to CNBC-TV18.
Exports last year grew to the tune of 15 percent overall and car exports crossed 600,000 mark, says Kirloskar. Going forward he expects 7-8 percent growth for the auto market and in case the EMIs come down the numbers will be even better, he adds.
According to him whenever stock market rises, expensive cars do well and when interest rates go down lower-priced cars do well. So, he expects cards to see a steady revival and possibly a double-digit growth in two years.
Two-wheeler growth slackened in last couple of months on back of poor rural demand, and going forward too unseasonal rains could impact them, feels Kirloskar. However, longer-term domestic auto market will see much stronger, he believes.
Meanwhile, the commercial vehicle segment which was down last two years has taken off now, and with further recovery in economy, uptick in infra projects could propel growth for that segment, says Kirloskar. Commercial vehicles, continued to reel under a prolonged slump, posting a decline of 2.83 per cent from 6,32,851 units in the earlier fiscal.
Moreover, light commercial vehicle growth that witnessed flat growth may see growth returning on back of pick up in economic activity, says Kirloskar.
According to data released by the Society of Indian Automobile Manufacturers (SIAM), domestic car sales in FY15 stood at 18,76,017 units as compared to 17,86,826 units in the previous fiscal. In 2013-14, car sales in India had fallen by 4.65 per cent in the previous fiscal. In 2012-13, they had fallen by 6.69 per cent, which was the first decline in a decade.
Below is the transcript of Vikram Kirloskar's interview with Sumaira Abidi & Reema Tendulkar on CNBC-TV18.
Sumaira: Can you take us through what have been the industry trends for 2015 and what are your expectations for 2016?
A: If you look at the April to March numbers for the 12 months we have had pretty decent growth considering the situation last year. It is also from a fairly low base; bulk of the growth has been starting from July, August and September second half of the year was when we started seeing little more growth.
What has been extremely good last year has been exports; they have grown tremendously in the last year, overall almost 15 percent. Car exports have crossed six hundred thousand. So I am very pleased with the numbers given the situation of the economy, the interest rates and inflation. Going ahead we will see about 7-8 percent in the growth in the market. We will see reasonably good exports. If the interest rates do come down, if the EMI's do come down we may see even better numbers.
Reema: Let us focus a bit on domestic market, will any pocket continue to face some tough times in FY16? What is the outlook looking like?
A: Two-wheelers are having a little tough time last couple of months. The unseasonal rains we had may also affect their growth this year. However, in the longer-term from a two-year perspective I see the industry being quite strong and domestic market getting stronger. I assume infrastructure projects will start doing better we have seen a really good ramp up in commercial vehicle and heavy vehicle industry.
Sumaira: Which segment do you think could see the fastest revival if and when things turn around?
A: Regarding cars we are seeing a steady revival across the board - some manufacturers are doing better than the other depending on product launches and each ones situation. However, overall we are seeing good strong revival, although not in double digits yet but it may grow double digits in the next two years.
Commercial vehicle and heavy commercial vehicles have really taken off in double digit number this year. They went down very badly last two years. Infrastructure projects fand general growth in the economy will spur this one on.
Light commercial vehicles have been pretty flat and I hope they move up too. Again economic activity will dictate the light commercial vehicle growth. Two-wheelers and three-wheelers growth depends on rural economy and how it grows. We see agriculture growing but last couple of months has been tough on them.
Reema: Is there any trigger point which you monitor which may help us to notice the revival?
A: I am not sure about two-wheeler; I have not been in the two-wheeler business at all and I have no idea. On the cars side typically if the stock market rises, the more expensive cars tend to do well and if interest rates coming down, the lower priced cars tend to do well.
On the commercial vehicle it is a more trigger to infrastructure projects and general growth in gross domestic product (GDP). Things like coal mining, may be road projects taking off - Nitin Gadkari has been talking of couple of kilometers (KM) a day going up to 10- 12-13-14 KM a day even up to 20 KM a day or higher. So, if these start reaching those numbers we will start seeing a take off in the commercial vehicles as well.
Two-wheeler like I said it is a play of money being available in the hands of rural market, urban market and suburban market, so it is money availability out there.
