NEW DELHI: After a momentous fall in demand in the second half of financial year 2018-2019 (FY19), auto industry body Society of Indian Automobile Manufacturers (SIAM) expects a 3-5 per cent growth in the sale of passenger vehicles (PVs) in FY20, backed by new launches, higher GDP forecast and pre-buying before the implementation of new BS-VI emission norms, which is expected to make vehicles expensive by 10-15 per cent from April 1, 2020.
“Demand for vehicles usually slows down before elections and picks up after a stable government informed. Beside this, everybody believes in the Indian growth story and various reforms implemented by the government will aide demand,” Rajan Wadhera, President, SIAM said.
As for the FY20 domestic sales outlook for other segments, commercial vehicles are expected to grow at 10-12 per cent, three-wheelers at 7-9 per cent and two-wheelers at 5-7 per cent during the fiscal. In FY19, these segments grew 17.55 per cent, 10.27 per cent and 4.86 per cent respectively.
Wadhera also commented on the below-expected sales in FY19, pointing out that the impact of the NBFC liquidity crisis was being felt by the sector. “There is still difficulty in accessing funds to buy vehicles,” he said. In FY19, PV sales grew by 2.70 per cent -- the slowest in five years -- to 3.37 million units as against 3.28 million units sold in FY18. SIAM, at the beginning of the year, had forecast PV sales to grow around 8 per cent in FY19.
Other factors casting a shadow on the PV industry is the emergence of shared mobility platforms like Ola and Uber.
SIAM believes that in cities, where a major chunk of sales take place, people have started opting for the services of cab aggregators.
“There are many factors that have muted the market sentiment. Preference towards shared mobility is one. Others are the rise in insurance premium cost, fuel prices, lack of fund availability and more,” Wadhera said.
Another segment facing the brunt of muted market sentiment is the two-wheeler industry. While urban markets continue to perform poorly, sales in rural belts have also declined in recent months. A difficult monsoon season will further drive away sales from the price-conscious segment.