'Rebound in auto sales unlikely this fiscal'

Reflecting the dismal mood prevailing in the automobile sector which has seen exports and domestic sales hit in equal measure by the economic slowdown, Toyota Kirloskar Motor Private Limited (TKML) Vice-Chairman Vikram Kirloskar said on Wednesday that the sector is unlikely to see a quick recovery in fiscal 2014.

“Within the automobile sector which has seen a steady decline in sales in the past 12 months, the commercial vehicle (CV) segment has been particularly hit. It will take a GDP growth rate of 6.5-7.5 per cent to revive the auto industry as whole,” Kirloskar said on the sidelines of the launch of the India Manufacturing Show 2014.

He noted that the two-wheeler segment has held its ground in the face of flagging consumer demand. However, it is difficult for the automobile sector as a whole to see any real traction in the CV space unless “something spectacular” happens by way of buyer and market sentiment improving substantially, he said.

Auto volumes remained weak in November as most manufacturers reported steep decline in sales post the festival season. The CV and UV (Utility Vehicle) segments have been particularly hard-hit, while industry watchers expect demand in the passenger car segment to remain muted. Tractors and the two-wheeler segment, however, have continued to grow at a healthy peg pushed by strong rural demand.

On the outlook for the sector, Kirloskar said that great improvements could not be expected in the coming months of the current fiscal. “It’s very hard to predict an industry rebound unless economic growth and GDP rebounds. There is a lot of uncertainty and its tells on industry performance,” Kirloskar said.

He hoped that things would improve in the next fiscal, at least after the elections, adding that TKML expects to see flat growth in sales during the current fiscal. “Growth has been largely flat. We hope to come close to our performance last fiscal (2012-13),” Kirloskar said.

The Bangalore-based automaker, which is the subsidiary of the Japanese car manufacturer, registered total sales of 12,748 units in November 2013 when compared to 11,357 units in November 2012 resulting in a growth of 12.2 per cent on the back of festival sales.

The company exported 2,540 units of its popular Etios series last month. Toyota Kirloskar also sold 10,208 units in the domestic market in November 2013 as compared to 10,352 units in Nov 2012.

But its overall perception of market sentiment remains dismal. “Taxes continue to be a big burden. At least 80 per cent of the cost of a car today comes by way of taxes. This is one reason why two-wheelers are doing better than cars,” Kirloskar said.

He noted that demand in export markets for small cars have been muted, with Europe still remaining a key market. “Africa has still not come of age as a viable market for small cars. As for the South East Asian markets, they do have strong manufacturing bases, but at the same time are very protective,” he said.

Under the circumstances, the company has been operating at capacities in the range of 55-60 per cent and focussing more on upgrading its maintenance, dealer and sourcing networks.

Toyota currently offers nine different models in India including the Etios, Etios Liva,Innova, Corolla Altis, Fortuner, Camry, Prius, Land Cruiser and Land Cruiser Prado.