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Anand Krishnamoorthy

NEW DELHI, May 5

THE automobile industry is expected to grow this year faster at 16 per cent, with strong performances by the car and motorcycle segments, according to the projections of Society of Indian Automobile Manufacturers (SIAM).

Aided solely by the robust 37 per cent growth in motorcycle sales, the overall vehicle sales in the country grew 13 per cent in 2001-02.

SIAM is forecasting a 10 per cent growth for the highly- competitive passenger car market, but is expecting the motorcycle sales to rev slower at 20 per cent.

"These are (still) very healthy growth rates,'' SIAM officials told Business Line.

SIAM's expectation of growth to speed up to 16 per cent is based on the assumption that the gross domestic product would grow in the region of 6.5 per cent in the current financial year.

As per the provisional sales figures provided by most two-wheeler and passenger car companies for April, the first month of the financial year, sales have been gathering a good momentum.

Equity analysts said the forecasts may result in further appreciation in frontline automobile and ancillary stocks, which have been gaining in the recent past.

Sales of medium and heavy commercial vehicles (HCV) and light commercial vehicles (LCV), a key indicator of the economic health and the infrastructure sector, are expected to grow at five per cent and four per cent respectively this year.

Last year, the overall commercial vehicle sales fell about three per cent year-on-year at 1.32 lakh units although HCV sales grew a small 2 per cent.

"This year, these segments are expected to grow as infrastructure projects are on the upswing. Also, with the introduction of multi-axle trucks, sales are expected to be better this year,'' SIAM officials said.

Passenger cars to shrug off stagnation

The competitive passenger car market, with 10 manufacturers, is expected to grow at a healthy 10 per cent in 2002-03 after remaining stagnant in 2001-02 and declining 8 per cent in 2000-01, SIAM said.

"With better agricultural production, the purchasing power is expected to grow this year, having its rub off on the economy. Hence, we are expecting the passenger car market to grow considerably,'' they said.

A tad over 5.7 lakh cars were sold in 2001-02, which remained flat compared with 2000-01. According to earlier estimates, domestic passenger car sales are expected to reach a tad below a million units by the year 2006-07 if the economy continues to grow at 6.5 per cent annually.

Motorcycle sales are, however, expected to grow slower at 20 per cent compared with a 37 per cent growth in 2001-02.

Moped sales, which has been falling for two years in a row, and scooter sales are expected to turn around in 2002-03 and post a 7 per cent and 3 per cent growth respectively.

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