New Delhi: Auto industry body SIAM on Wednesday revised car sales projection for the fourth time in the current fiscal, forecasting a meagre growth of 0-1 percent -- down from the first ambitious estimation of up to 12 percent.
The downward projection reflects severe slowdown in the industry across the segments.
"Based on the third quarter performance, SIAM is revising the projections. There are significant changes in expectations based on performance of all segments till date," SIAM President S Sandilya said told reporters here.
SIAM Deputy Director General Sugato Sen said continuous changes in the overall economic scenario as well as the domestic and international markets impact growth.
"Initially we thought that the market will perform good so we projected a growth of 9-11 percent, but it was not the case. Every time a new issue crops up. So, accordingly we have to revise the projections," he said.
Society of Indian Automobile Manufacturers (SIAM) has lowered car sales growth projection to just 0-1 percent for this fiscal, from 1-3 percent and 9-11 percent announced in October and July respectively. In April, it had forecast a growth of 10-12 percent for 2012-13.
Sandilya said there are no signs of a significant growth in the sector because of slow economic growth, inflation, high vehicle finance and fuel prices and differential excise rates.
SIAM also said the auto industry will miss its ambitious target of clocking an annual turnover of USD 145 billion by 2016 under the Automotive Mission Plan (AMP).
"AMP target of annual turnover of USD 145 billion by 2016 is expected to be missed by USD 34 billion," Sandilya said.
"SIAM requests government to look into the possibility of extending AMP till 2026 to further nurture the sector to extract full potential benefit for the economy in terms of contribution to GDP, value addition and employment," he added.
In the third quarter of this fiscal (October-December), passenger vehicle sales, including cars, grew by 11 percent at 6,81,000 units.
He said the overall economic situation in the country, low sentiments, high petrol prices and interest rates are among the factors hurting the overall sales of the auto industry.
Overall, the auto industry's sales are expected to grow by 3-5 percent, much lower than the earlier estimate of 11-13 percent for this fiscal, Sandilya said.
He said that SIAM has already approached the government to extend the tenure of the AMP by another 10 years in the wake of the development.
SIAM has also lowered growth projections for other segments this fiscal. Passengers vehicles sales, which include cars and utility vehicles, have been pegged to grow at 7-10 percent, as against the earlier estimate of 11-13 percent.
SIAM said, however, the utility vehicles (UVs) segment - which has seen a jump in sales due to launch of price attractive models - may grow by 56-64 percent as against 29-31 percent projected before.
Two-wheelers are estimated to grow at a much lower rate of 3-5 percent this fiscal, as against an earlier projection of 11-13 percent, SIAM said, adding that the softening of rural demand and sustained cautious urban sentiment are impacting the sales.
The commercial vehicles segment is also forecast to grow at a lower rate of 0-2 percent, as against the earlier projection of 6-8 percent.
The industry body has kept the growth forecast for the three-wheeler segment at 4-7 percent.
Commenting on the overall outlook, Sandilya said that there is a "need to watch interest rates, fuel prices and commodity prices carefully. Also, need to watch government policy initiatives which may undermine benefits."
He added: "With current economic outlook industry need to grow at a pace much faster than what is expected, to keep in line with the targets of Auto Mission Plan."
To boost the growth of commercial vehicle segment, he asked the government to take steps like modernisation of vehicle fleet, incentivise banks financing Indian products abroad and increase depreciation rate for CVs to 60 percent.
In order to revive the growth of the industry the SIAM President asked the government to reduce interest rates, increase infrastructure spending, opening of mining sector and controlling inflation through supply side improvement.