Auto sales hit dead end second year in row

Car sales in the country shrank for the second straight year in 2013- 14 as the auto industry continued to struggle with the demand slump in a slowing economy.

According to data released by the Society of Indian Automobile Manufacturers (Siam) on Friday, domestic car sales for 2013- 14 contracted by 4.59 per cent at 17,86,899 units down from 18,74,055 units in the previous fiscal.

"This was one of the most difficult years for the industry. The business environment was tough due to low growth of the economy, high interest rates, fuel prices and low sentiments," Siam president Vikram Kirloskar told journalists. The decline in sales hit the industry hard and employment, mainly of contract and temporary workers, has been affected, he added.

In 2012- 13, sales fell by 6.69 per cent, which was the first decline in a decade. " We at Siam have not done a calculation of how much job losses were there, but I personally feel that across the entire value chain in the auto industry, from raw materials to dealerships, there could be around 1- 1.5 lakh job losses," Kirloskar said.

Sales of commercial vehicles fared even worse posting a decline of 20.23 per cent at 6,32,738 units compared to 7,93,211 units in the earlier fiscal. " The stalling of infrastructure development projects, ban on mining activities and overall slowdown in the economy continued to hit the commercial vehicles segment," Kirloskar explained.

On the outlook for 2014-15, Kirloskar said that the industry is hoping for a moderate growth or, at least, hoping to get out of the negative territory.

Higher two-wheeler sales helped to the auto sector as a whole to clock a modest 3.53 per cent growth in 2013-14 at 1,84,21,538 units as compared to 1,77,93,701 units in 2012- 13.

When asked about the expectations of the auto industry from the new government post elections, Kirloskar said, " We hope the excise duty cut will remain. In fact, there is room for further reduction in taxes as auto industry is one of the most taxed sectors,'' he lamented.

"A growth-oriented policy that will spur manufacturing activities and overall economy to lift consumer sentiment will be crucial."

Courtesy: Mail Today