News and Events

Carmakers have their eyes firmly fixed on the skies as the outcome of the monsoon will determine whether they will be able to shrug off the slowdown blues currently plaguing the industry. Car sales are forecasted to grow slower than previously anticipated as high petrol prices, uncertain economic climate and high financing rates have dampened demand. Car industry body Society of Indian Automobile Manufacturers (Siam) on Tuesday revised its full-year car sales forecast downwards to 9-11% against the previously-forecasted 10-12%. While a section of the industry feels that the downward revision could have been even sharper considering that sales have grown only 5% in the first quarter (April-June 2012-13), Siam is still hopeful. The only concern that remains, however, is the monsoon. "Monsoon is a big risk factor. If the rains are not good, inflation is not going to come down and so will the interest rates," Siam DG Vishnu Mathur told TOI. Monsoon has been delayed and remained weak this year and there are fears that it may remain below normal through the season. Mayank Pareek, managing executive officer at Maruti Suzuki, said a good monsoon was crucial for a turnaround in car sales. "While the actual effect of monsoon on the economy may not be much today as the dependence on agriculture has come down, poor rains will affect sentiments badly. It is adverse as people defer purchase decisions on products like cars." General Motors agrees. "The rains are very important as only a good monsoon will boost demand. We are all eagerly looking forward to good rains. Any turnaround in the festival season will be possible only when the monsoon is normal," P Balendran, VP at General Motors India, said. After a near-flat performance in 2011-12, car sales have been on the edge this fiscal as negative factors like high interest rates and petrol prices weigh heavy on customer sentiments. June car sales point to weakening demand. The domestic car sales volume was the lowest since November, even though there was 8% growth year-on-year. Total car sales volumes in June stood at 1.55 lakh units against 1.43 lakh units in the same month last year. Two-wheelers sales in June saw single-digit growth (9%) as motorcycle volumes were up only 7%, much lower than scooters, which grew by 23%. A good monsoon is a must for two-wheelers as well where sales are heavily dependent on the income in rural areas. Siam maintained its full-year forecast on two-wheeler sales at 11-13%, but linked to the monsoon. The auto body cut the outlook on sale of commercial vehicles to 6-8% against the previously-forecasted 9-11%. The downgrade factored in a major revision in outlook for medium- and heavy-goods vehicle sales, where full-year sales are expected to decline by 6-8% against the previously-forecasted growth of 5-7%. "The downgrade is due to the state of the economy," Siam president S Sandilya said.