Mumbai: Automobile production, which took a hit due to the high borrowing costs and rising fuel prices coupled with weak consumer sentiment in the April-August period, is likely to bounce back in the second half and may end FY13 with about 6 percent growth, CMIE has said.
The recovery in the production is expected to come on the back of festival season and a host of new launches by auto companies, the Centre for Monitoring Indian Economy (CMIE) said in its latest report.
"We expect automobile production to grow by 5.8 percent in the current fiscal. Yet, this will be considerably lower than 13.8 percent recorded in the previous fiscal."
The RBI's continued hawkish stance on key policy rates and rising oil prices along with deceleration in consumer demand impacted the auto production in the five months of the fiscal as it grew by a muted 4.1 percent, the report said.
According to CMIE, the two-and three-wheeler industry, which accounts for almost three-fourths of total production, is expected to grow by a mere 5.9 percent during the fiscal, impacting the overall industry's growth.
"However, driven by a likely 32.7 percent growth in the multi-utility vehicle segment, passengers cars and vans, the segment is expected to record a slightly faster 6.2 percent growth," the city-based economic think tank said.
Passenger car and van production dropped by 2.4 percent in the April-August period, the report said, adding however the festival season, new launches and resumption in production at the Maruti's Manesar plant will help passenger car and van output to grow by 2.6 percent this fiscal.
The industry saw launch of a new Alto from Maruti, the Rexton and Quanto from M&M, Indigo Manza Club Class, Safari Storme from the Tatas, the new Figo from Ford, and the automatic version of the Honda Brio in last couple of weeks.
A likely pick-up in manufacturing activity and higher agricultural and export-import cargo in the second half is expected to generate a higher demand for transportation.
This, subsequently, will help limit the fall in medium and heavy commercial vehicles production to 6.4 percent from 4.2 percent in the April-August period, the report said.
However, light commercial vehicle production is likely to rise by a healthy 8.9 percent, it added.