India's auto sector growth stalls

India's output of vehicles rose only 1.2% in the year to March 2013, as growth in domestic demand slowed and exports fell.

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The country produced 20.62 million vehicles in the year to March, up from 20.38 million in the 12 months to March 2012, the Society of Indian Automobile Manufacturers (Siam) said.

India’s economy has slowed as the government tries to temper inflation, leading to a slowdown in demand for big-spend consumer goods, the society said. 

“Current economic growth, inflation, fuel rises, excise duties on sports utility vehicles (SUVs) and high vehicle finance rates were some of the factors affecting auto sector growth,” said Siam, which represents 47 of the country’s vehicle manufacturers.

Domestic market sales during 2012-13 were recorded at 17.81 million vehicles, compared with 17.36 million in 2011-12, an increase of 2.61%. However, vehicle exports fell 1.34% to 2.89 million, from 2.93 million units in 2011-12.

“Exports were affected due to the economic slowdown globally; changes in export policies in major export markets (Sri Lanka), intensive competition in export markets with no major incentive to make our products attractive,” Siam said.

The medium and heavy vehicle sector recorded its biggest-ever drop in production, falling 27.61% to 278,560 during 2012-13, compared with an output of 384,801 units in 2011-12. Domestic truck sales were also down, by 23.18% from 349,216 to 268,263 units, while exports slumped 33.25% to 19,019 units from 28,495 units sold in 2011-12.

In 2012-13, total commercial vehicle production was down by 10.48% at 831,744 units, compared with 929,136 units, with domestic sales down 2.2% from 831,744 to 793,150 units, and exports down 13.35% to 79,944 units, compared with the 92,258 units exported in 2011-12.

However, passenger vehicles and two- and three-wheelers showed some improvement to offset these declines, Siam said.

Three-wheeler sales grew by 4.87% in 2012-13, from 513,281 to 538,291 units, while two-wheeler sales were up 2.90% to 13.79 million units, compared with 13.40 million units sold in 2011-12.

And passenger vehicles sales were up 2.15% from 2.62 million to 2.68 million units on the domestic market, with exports up 9.02% from 508,783 to 554,686 units. 

Siam added that the 1% reduction in excise duties on commercial vehicle chassis and the extension of the Jawaharlal Nehru National Urban Renewal Mission scheme to encourage the purchasing of buses for hilly states could have a positive impact on the industry in the year ahead.

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