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Economy restricting growth of one of largest Automobiles Industries in the world


The fiscal year 2013-14 was a rather mixed one for the Indian automobile sector. The automobiles industry witnessed a slight growth, in both production and domestic sales, but it was entirely the result of growth in the two wheelers segment. The passenger cars, commercial vehicles and three wheelers segments actually were down compared to previous year. The declining economic progress and uncertain growth prospectus, not so positive macro economic factors, pending and delays in policy decisions and infrastructure projects, are all being contributing towards this current downward trend in one of the top global car markets.

According to the data released by the Society of Indian Automobile Manufacturers (SIAM), automobiles domestic sales registered a modest 3.5% growth in 2013-14 on the back of a 7.3% growth in two-wheelers. The combined passenger and commercial vehicles sales declined by 9.5%. The reason a single two wheelers segment's growth turned the overall negative growth into positive is due to the segment size and share. While the combined passenger and commercial vehicles, and three wheeler segments sold close to 4 million units, the two wheelers sold were 13.8 million, more than 3 times.

Looking at individual segments, the passenger vehicles sales declined by 6% while the commercial vehicles registered the steepest decline of 20%. The decline in three wheelers was 11%.

The exports, however, remained positive with a 7.2% growth rate. Passenger vehicles registered a 6.1% growth. The three wheeler and two wheeler segments also grew by 16.6% and 6.5% respectively. The commercial vehicles suffered at this front also with a overall 3.7% decline in exports. Among commercial vehicles segment, the M&HCVs registered a growth of 22% while LCVs declined by 12%.

Despite the slowing or declining growth, the size of the Indian automobile market along with long term growth prospects is expected to make India the fourth largest market globally, surpassing Japan and Germany in coming years. For this to achieve much needs to be achieved at the macro economic front, and bring the economic factors in sync with growth.



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