Monsoon, pay panel awards brighten car sales prospects

Growth in passenger vehicle sales may be higher than the 6-8 per cent forecast for the current financial year in view of a better outlook for the economy, good monsoon rains and implementation of the 7th Pay Commission recommendations, the Society of Indian Automobile Manufacturers (Siam) has said.

Siam had in April revised downward the growth forecast for passenger vehicle sales to 6-8 per cent for 2016-17 citing burden of high taxation and an unfavourable environment for diesel vehicles. In March, it had already lowered the forecast to 11 per cent from 12 per cent stated earlier.

''There is no recalculation (on growth forecast for passenger vehicles) but we are expecting it to be better than that (6-8 per cent),'' Siam deputy director general Sugato Sen told reporters in in Mumbai.

Explaining the reasons for the auto industry's cautious optimism, he said the economy is expected to do well, monsoon has been good so far and although the interest rates have remained high they are expected to decline going forward.