Fresh rate hike may hit auto sales, says SIAM

 “If there is a hike in policy rates in November, it will have a significant impact on the industry,” Society of Indian Automobile Manufacturers (SIAM) President and Mahindra & Mahindra President-–Automotive and Farm Equipment, Pawan Goenka, told reporters here on Friday.

A few banks have already upped their interest rates on auto loans apart from hiking their benchmark prime lending rates (BPLRs) and base rates.The Reserve Bank, had, last month, hiked its short-term key rates—repo and reverse repo rates. Goenka, however, did not expect the hikes to impact October sales, adding that it may reflect on next month’s sales data.

The shift to BS III emission norms (from October 1) was achieved smoothly, Goenka said. On September sales, he said that the performance was better than targeted with a total sale of 13,29,086-units as against 12,63,293-units in August. “The performance was better than what we targeted in August,” he said. The third-quarter last fiscal witnessed robust sales and Q3 this fiscal will be pitted against this performance, he said.

“So I expect a moderate growth in Q3. However, I was proved wrong in Q2 and I don’t mind being wrong again,” he said. The overall vehicles sold in the domestic market during September grew by 21.63 per cent from 10,92,687 units in the same month last year.

Goenka said September sales were driven by best-ever monthly sales achieved in passenger cars, motor-cycles and the total two-wheeler segment.

Two-wheelers achieved landmark sales during September crossing the one-million mark to reach 10,05,162 units, up 19.93 per cent from 8,38,152 units in the same month last year.

He said that in FY 11 the total industry was expected to grow by 18-20 per cent, of which the passenger vehicle segment will grow by 21-23 per cent with over 2.4- million units, commercial vehicle by 20-22 per cent with over 6 lakh units, three wheeler 15-17 per cent with 5-lakh units and two wheeler 17-19 per cent with 11-million units.

The total industry-size is also expected to be $80-billion this fiscal, which is positive for reaching the $145 billion target set for FY 16, he said. Describing the scenario in the tyre industry as “hand-to-mouth” but “not out of control”, Goenka said that “it (the situation) is likely to improve on the back of a likely improvement in rubber production.”

“By 2016, India will emerge as the destination of choice in Asia for the design and manufacture of automobiles and automotive components. The output of the India’s automotive sector will be Euro 115-billion by 2016, contributing to 10 per cent of country’s GDP and providing employment to 25 million people,” he said.