Two-wheelers will continue leading the auto pack even in 2015, despite having reported weak demand in December, says Society of Indian Automobile Manufacturers (SIAM) President Vikram Kirloskar. The two wheeler sales came down by a little less than a percent in December.
According to him, the lower demand for two-wheeler vehicles in December may just be a one-off as there is a lot more scope for growth of two-wheelers in India.
In an interview to CNBC-TV18, Kirloskar says the auto industry grew about 2-3 percent last year but this year it is expected to double its growth to around 5 percent.
Below is verbatim transcript of the interview:
Q: In car sales we saw quite a bit of traction last month but do you think it was a bit of a one-off because of the pre-buying ahead of excise duty benefit being withdrawn or do you think there is genuine sign of some recovery there?
A: I think it is going to be a one-off because of the excise duty hike which was expected in January. Also, a lot of companies were giving discounts to clear out the 2014 stocks. I think it was a combination of both. December numbers look great, the average four wheeler growth is like 14-15 percent up compared to last year and it is good to have such numbers.
Regarding commercial vehicles also there has been some improvement from last year. There is some improvement in three wheelers space as well. Only the two wheelers have come down by a little less than a percent which is unfortunate.
Q: What is happening in the two-wheeler space because now there seems to be a demarcation between companies that are seeing volume growth like HMSI, TVS Motor though it might have lagged from previous months but it is still showing a growth of 18-20 percent as compared to the likes of Hero Motocorp which is up 0.21 percent in the month of December. Do you sense that the competition dynamics is moving towards the two-wheeler sector more significantly and that is what we could see in 2015, an outperformance from the likes of HMSI as well as TVS Motors versus the likes of Hero Motocorp and Bajaj Auto?
A: We have to safeguard ourselves when we look at these numbers on a monthly basis, we must try to look at them from a three-month perspective or so because these are wholesale numbers and depending on stock situations and depending on each companies policies on how to handle their old 2014 or year end models you may see some big differences coming up.
However, if I look at last year, two wheelers have been doing consistently well throughout the year. Maybe in this last December month for various reasons they have dipped. Try to look at the numbers like a two month or a three month average, I think then you will find the discrepancies are not so much.Q: Do you believe that maybe it would have been better with the recovery still nascent to have another six months to nine months of excise benefit?
A: Let me give a little history of this excise benefit. This excise duty was raised very sharply in 2013 and that time it was especially on SUVs saying that we are subsidising diesel and therefore, we will increase duty on excise and all these things that were happening.
In 2014 February they reduced the excise duty not yet back to the original levels at 2012. So, this 2013 hike was like trying to equalise on diesel subsidy. So, I don’t think it has been fair to again bring it back to that 2013 level. I was very disappointed that they did not extend it till March.
On the other side I want the Budget deficit to be within the targets so that we strengthen our economy and our whole fiscal situation as a country. To get Make in India, the auto sector has to lead the manufacturing economy; we are always saying that and to do that we need volumes. Volumes are the key drivers of employment and this whole manufacturing Make in India plan.
Q: What is your sense on MHCV sales, do you think it has bottomed out completely?
A: They look good in December. As these projects get cleared you will start finding that these sales will start improving; all the truck sales.
The trucks again as I have repeated earlier it is capital equipment versus a consumer purchase in the other sector. So, as the real requirement of this kind of capital equipment starts increasing with new projects getting implemented you will find this improving.
Q: Can you just leave us with what your thoughts of 2015 would be, if you had to say that one specific sector within auto space will outperform, a segment rather which one would it be, which one would lead in terms of growth and what do you think the industry growth would possibly be?
A: I think the two wheelers will still lead, there is a lot more scope for two wheelers across the country, this may be a dip in December which is some adjustment here and there; I think that will still lead.
You had said earlier instead of 14 they have downgraded to 11 that is still a lot. I think in four wheelers last 12 months has been about 2.6 percent, I hope we double that next year to 5 percent growth. Commercial vehicles if we get a couple of percentage growth next year it will be fantastic.
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