labels: automobiles - general, two- and three-wheelers, society of indian automobile manufacturers, automotive
Auto exports cross $1 billion in 2003-04 news
Our Corporate Bureau
24 April 2004

New Delhi: India has entered the elite club of countries with one million plus passenger vehicles during 2003-04, with encouraging results from all segments of the automobile industry. Sales, including exports, stood at 1.03 million with overall automobile industry export having grown in 2003-04 by 56 per cent over last year, which in value terms crossed $1 billion for the first time.

The strong results are attributed to:

  • Better performance of the economy and higher all round growth leading to high GDP growth of 8 per cent
  • Excise duty reduction on passenger vehicles
  • Brisk pace of infrastructue development
  • Softening of interest rates and improved financing of second hand vehicles
  • Availability of finance in rural and semi-urban areas
  • Emergence of India as a manufacturing hub for the Automotive Industry

According to Jagdish Khattar, managing director, Maruti Udyog Ltd and president, Society of Indian Automobile Manufacturers (SIAM), the automotive industry’s performance is closely linked to industrial growth, which during the year was around 7 per cent while agriculture output had increased by over 10 per cent.

He feels that the outlook for the year 2004-05 was promising since the current growth rates of GDP and industrial output appeared sustainable. This would ensure robust growth in the automotive sector, especially since India is the fourth largest economy (estimated at $2.5 trillion) after the US, Japan and China in terms of purchasing power parity.

Automobile Industry Performance during 2003 — 04
During 2003-04 the automobile industry registered a growth of around 16.5 per cent in sales and 24 per cent in value.

Segment-wise Performance
Passenger Vehicles
The excise duty reduction on passenger vehicles in the union budget 2003-04 has directly impacted the sales of passenger vehicles positively as it has reduced the acquisition cost to the customer. The cumulative passenger vehicle sales in the domestic market in April-March 2003-04 have grown by over 27 per cent over the same period last year. However, this is against relatively low and negative growth rates in the previous years.

Within the passenger vehicle segment, while passenger cars and utility vehicles have grown at 28.6 per cent and 27.6 per cent respectively, multi-purpose vehicles (MPVs) have grown at a lower rate of around 14.5 per cent. However, the growth of MPVs this year is significant as it was (-)15.7 per cent in the last year.

Commercial Vehicles
The commercial vehicle segment has grown by over 30 per cent in consecutive years. This year, it clocked a growth of 36.5 per cent. The medium and heavy commercial vehicles segment grew by 39.5 per cent whereas light commercial vehicles grew by 32 per cent.

With improved economic performance, especially in the agricultural sector, besides the expansion of national highways and expressways, has led to fleet rationalisation in and increased penetration of multi-axle vehicles. During the year, 1998-99 sale of multi-axle vehicles was 4,539, an increase of 67 per cent per annum over a five year period. The total share of multi-axle vehicles in the heavy vehicles category has grown barely 5 per cent to around 40 per cent.

The two-wheeler segment as a whole grew by 11.5 per cent during April-March 2003-04, lower than in previous years though on a larger base of 4.8 million vehicles. However, with the development of rural roads and better connectivity with major towns and cities, the two-wheeler industry expects a better performance in 2004-05.

Moreover, with improved agricultural performance, purchasing power in rural areas is expected to go up and positively impact two-wheeler sales. With changing consumption pattern in semi-urban and rural areas from food to non-food items (down to 40 per cent compared to 88 per cent twenty years back, better two-wheeler sales are expected in the future.

Passenger vehicle exports have crossed the hundred thousand mark and clocked sales of around 1,30,000, while two- three-wheeler sales have crossed the three hundred thousand mark for the first time at around 3,33,000. Commercial vehicle exports have also increased to an all-time high of over 17,000. In per cent terms the growth during the year over the previous year have been almost 80 per cent for passenger vehicles, over 49 per cent for two- three-wheelers and over 40 per cent for commercial vehicles.

Outlook for 2004-05
SIAM expects a healthy growth in sales (including exports) in the automobile sector in 2004-05. Segment wise growth expectations are:

  • Passenger vehicles : 10 - 15 per cent
  • Commercial vehicles : 12 - 15 per cent
  • Two-wheelers : 10 - 15 per cent
  • Three-wheelers : 10 - 15 per cent

The automobile industry expects to cross domestic sales of one million vehicles during in 2004-05, excluding exports. However, SIAM feels the real challenge before the Indian automobile industry is to catch up with China, which was on par with India till recently and is currently aspiring to become the third largest market in the world.

With current penetration level of six cars per thousand Indians, the potential for growth is significant.

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also see : Indian automobiles industry on overdrive

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Auto exports cross $1 billion in 2003-04