If the vehicle production and sales figures for April-January 2012 released by SIAM are anything to go by, a fairly good pick-up in demand for vehicles of different categories can be said to have been achieved. This despite the adverse impact of the general US slowdown and the Eurozone debt crisis dampening the economies across the world, including India, as well as the escalating interest rates for vehicle financing. Cumulative vehicle production for the 11-month period registered an appreciable growth of 14.56 per cent over the same period of last year, the output in January alone going up by nearly 12 per cent as compared to the same month last year. Barring three-wheelers, sales of which registered a negative growth of 0.44 per cent, sales in other segments were encouragingly high. The CV segment grew by 18.63 per cent. Passenger vehicles recovered marginally at 1.45 per cent and utility vehicles were up by 13.03 per cent. Particularly in January, passenger cars, vans and utility vehicles recorded a commendable growth of 7.20 per cent, 14.15 per cent and 15.72 per cent respectively, while growth in the overall passenger vehicles and CVs in the month was 8.86 per cent and 13.52 per cent respectively.
A clearer picture of the things to come emerged earlier with the enthusiastic participation by both Indian and overseas vehicle and component manufacturers in Auto Expo 2012 held in Delhi. The number of exhibitors for the first time in the history of the expo exceeded 1,500, with over 50 new launches of different vehicle models and accessories most suited to the modern era. The overall impression among the participants was that India is the second best destination, next only to China, for interested automotive investors. Several MNCs took the opportunity to tie up with their Indian counterparts, and more collaborative ventures are in the offing if the negotiations underway attain frution. Based on the current estimated growth, the Indian auto sector is sure to attain the double-digit growth which it could register consecutively for three years preceding the recession-hit 2008.
What has enthused general industry is the RBI move to cut the cash reserve ratio (CRR) by 50 basis points from six per cent to 5.5 per cent with effect from January 28, which, in effect, would mean a release of Rs. 32,000 crores into the financial system to spur industrial growth. This is considered a measure to restore the growth trajectory by ensuring sufficient liquidity. Further, the Finance Minister, Mr. Pranab Mukherjee, has well responded to the RBI initiative by observing that the cut in CRR would signal that the next step is a cut in general interest rates. This augurs well for the economy, for the contemplated low interest regime in the forthcoming Union Budget would benefit all industry sectors, including automobiles.