Car sales up 2.46 per cent in 2014; SIAM sees FY15 growth at 1 per cent

New Delhi: Car sales in India got back in positive territory in 2014 with a 2.46 per cent increase on excise duty reductions brought in by the government to propel  the struggling industry. However, with the excise duty concessions gone, industry body SIAM is expecting a marginal increase of around one per cent in this fiscal against an earlier expectation of four per cent.  Passenger car sales during the January-December period rose to 18,51,475 units as against 18,06,965 units in 2013, a growth of 2.46 per cent. 

This is in contrast to the 9.59 per cent dip in 2013 which was the first time in eleven years that car sales  declined in the country. "Vehicle prices were down for the nine months in the  previous calender year due to excise duty reductions. It  helped in creating a positive sentiment thus helping growth in  sales," Society of Indian Automobile Industry (SIAM) Deputy  Director General Sugato Sen told reporters here. 

"The industry sold 1.8 million cars in 2014, it is not a  very significant growth over 2013 but it is better than a  negative growth," he added.  Sen said despite the expiry of excise duty concessions, the industry is expected to grow marginally in the current  fiscal.  "We expect a low single digit sales growth of around one  per cent during the financial year. We are not anticipating negative growth this fiscal," Sen said, adding that earlier it  was estimated that car sales could grow by around four per  cent in the current fiscal. 

Commenting on the motorcycle segment, which posted a  growth of 6.21 per cent in sales in 2014, Sen said the sector  grew primarily due to relief in excise duty during the year.  Motorcycle sales last year stood at 1,09,13,003 units as  against 1,02,75,001 units in 2013.  When asked about the commercial vehicle segment, which  saw sales drop by 11.8 per cent to 6,06,232 units in 2014, Sen  said the sector did not perform well as "real economic  activity is still to gain steam." 

Commenting on implications of higher excise duty, Sen  said: "There will be some negative impact. Customers have advanced their purchases in December so there could be an  impact on sales in January and February." The excise duty relief created a very positive sentiment, which helped the industry, but now that it has been withdrawn, it remains to be seen how much impact it would have, Sen said.  He added that a cut in interest rates might help the  industry recover from the impact of increased prices.

"The most vulnerable segment is small cars. It is the  most sensitive segment as far as pricing is concerned. It is  going to be the first one to be hit due to expiry of excise  duty relief," Sen added.