Economic downturn coupled with poor market sentiment has led to a sharp slump in demand for automobiles. The Society of Indian Automobile Manufacturers (SIAM) has pared car sales projections for a second time this fiscal and has stated that the auto industry will miss its target of reaching the proposed annual turnover of $145 billion set for 2016 under the Automotive Mission Plan (AMP).
Poor sales growth has led SIAM to lower growth to 1-3% as against 9- 11% growth that it had forecast earlier in July this year.
With growth slump, SIAM pointed out the auto industry will miss the projected target of $145 billion by 20-25%.
“Considering the low growth that we have seen in the Q2 of this fiscal and the overall macro-economic situation we feel the car sales will grow around 1-3% this fiscal,” SIAM president S Sandilya told reporters. If the car sales grow at this rate then it will be the slowest since 2008-09 when it grew by 0.18%. he added.
In Q2 of this fiscal, passenger vehicle sales including cars grew by just 4% at 6,18, 000 units as against 5,93, 000 units in the year-ago period. The overall economic situation of the country, low sentiments, high petrol prices and interest rates are among the factors hurting the overall sales of the auto industry.
He said, “Overall the auto industry’s sales will grow by 5-7% much lower than the earlier estimate of 11-13% for this fiscal.” If this current trend continues then we will miss the AMP target of achieving an annual turnover of $145 billion from auto and auto-component manufacturers by 2016, he said.
“The shortfall will be $34-35 billion and the industry may need to grow at a minimum of 16-18% in the next 3-4 years to achieve it, he said adding it is unlikely that we will grow at that rate and we have missed the bus”.