Sept sales to decide revision of full year forecast: SIAM

Total two-wheeler sales in August 2012 decreased by 4.50% to 10,57,925 units from 11,07,782 units in the same period of previous year.

S Sandilya, President, Society of Indian Automobile Manufacturers (SIAM) told CNBC-TV18, its high time now that the government should take measures to stimulate the auto industry . 

"The government has stopped vehicle purchases from the last June, so that’s another area where they can give certain amount of relief," he explained.

Sandilya also pointed out that GDP growth immediately impacts the commercial vehicle industry, so the government needs to encourage infrastrcture investment to boost demand.

Below is the edited transcript of Sandilya’s interview with CNBC-TV18.

Q: We understand that you are sufficiently worried after looking at the August numbers to perhaps bring down your estimates for the full year. What are you looking at in terms of growth for two-wheelers and for four-wheelers?

A: As far as growth for the year is concerned, we’ll get back to you in the month of October. Normally around 10th-11th October we come out with our estimates. The August sales have been down. There is no gain saying the fact that the sentiments are not okay, it is pretty low especially the car sales are lower. The medium and heavy commercial vehicle sales are also dipping. The light commercial vehicles are holding their stand and scooters are quite okay.

The utility vehicles have done pretty well even in the month of August, so that’s a very positive trend. But overall, we should look at April to August we take the full financial year, there is a bit of a dip, but it is still at a tolerable level. We have to wait and see how September takes on and then we will look at the forecast being revised for the whole year.

The time has come for the government to look at some kind of stimulus to be done for the auto industry taking the tendency have not being so good. Also, they must do something to boost the economy. If you look at the commercial vehicle segment the freight rates are not looking up, the trucks are there, the supply is more than the demand and that doesn’t auger well because that entirely depends on the GDP growth.

Unless the economy grows, the infrastructure spending takes place, there is certain amount of boost given, government has stopped vehicle purchase from the last June, so that’s another area where they can give certain amount of relief. There are quite a few things that the government can do to boost up the sales and leaving it alone like this will not auger well for the industry.

Q: Have you had any meetings with the government and any plans have been talked about to boost demand so far?

A: Not yet. When we had the annual session of SIAM we had the politicians and government secretary level people interacting with us, they are aware, but at that time the August numbers were not totally out. We did share with them the kind of sentiments.

We did talk to them that given the Auto Mission Plan that we are midway through are not likely to reach their target. We must look at extending the Automotive Mission Plan period.

Not withstanding that, for the current year itself there must be certain amount of things given in terms of incentives or doing something to boost up the economy. Particularly in the infrastructure, the government should start implementing the infrastructure projects.

Q: What is the kind of inventory pileup that auto makers are talking about at this level?

A: At the moment I don’t have all the data of the inventory pileup. There is that tendency that the auto makers do have the inventory. There is a talk of people offering discounts for the models that are not moving, but yet there are waiting list for certain models. So, it is a mixed bag.