Auto sector to end FY13 with negative growth: SIAM

Car sales could be staring at a 10 year low. The data released by the auto apex body Society for Indian Automobile Manufacturers (SIAM) today paints a very gloomy picture for the overall industry. Sales of passenger cars and heavy and medium commercial vehicles are in reverse gear and are the worst hit segments. CNBC-TV18’s Ronojoy Banerjee reports.

The forecast by SIAM is getting gloomier for the overall automobile industry. If months of November and December were not bad enough for car manufacturers, the first month in 2013 has also started on a very somber note with overall passenger car sales declining over 12 percent.

Industry has ruled out any dramatic turnaround in the months of February and March. In all likelihood for the first time in 10 years, passenger car sales are going to record a negative growth in FY13. It was in 2002-2003 when the overall car sales had crashed a little over 2 percent. So, FY13 is going to go down as one of the worst years, far worse than 2008-2009, the slowdown year.

As far as manufactures like Tata Motors are concerned, from the data it appears to be the worst impacted with the company being forced to cut production over 44 percent for their passenger vehicle segment in the month of January. Even Ford Motor Company had to cut production by nearly 20 percent.

Overall, the medium and heavy commercial vehicle segment continues to bleed. This time around sales crashed 40 percent. SIAM has very categorically stated that the commercial vehicles segment especially the medium and the heavy segment will not turn around without a government actively intervening.

They are hoping that in this Budget the government will announce some sort of a second round of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme, which will turnaround the sentiments, but as of now things are not looking good for the auto sector at all.