In an interview with CNBC-TV18, Vikram S Kirloskar, President of Society of Indian Automobile Manufacturers (SIAM), discussed January auto sales, and said that while passenger sales were decent though two-wheeler sales were not as good as expected.
"If we look at January, February and March as combined sales and see the average we will get a better picture," he said. "Nonetheless, sentiment has definitely improved."
Below is the transcript of Vikram S Kirloskar's interview with Sumaira Abidi & Reema Tendulkar on CNBC-TV18.
Reema: Could you give us the consolidated industry sales for the month of January? How did the passenger vehicles do the two-wheeler performance as well as the commercial vehicle (CV)?
A: I have got some numbers. Passenger vehicles have been pretty decent. The industry overall has grown more than 5 or 6 percent compared to last year the same time.
In December, lot of stocks on vehicles got cleared out because of the change in excise duty structure and so there have been very robust sales to dealers this month. I have not got the final two-wheeler number from SIAM but as you said that they are not as good as we expected. The trucks are also moving better I think.
Sumaira: We understand that this time around there was a bit of a hit also because of that excise duty hike that came through. However, do you think the worst for the auto industry is now behind them and things could now pick up from here or could they be a few more months of sales data like the one we have seen in January?
A: We should look at sales over a three-month running average. It will give a better sense because everyone cleared out their stocks with the dealers in Decembers. So there has been very robust wholesale in January.
If we look at January, February and March as combined sales and see the average we will get the better picture. Nonetheless, sentiment has definitely improved. The reduction in interest rate and the reduction in fuel prices have definitely got more people to moving to showrooms.
Reema: Talking about two-wheelers because there appears that the retail sales have weakened considerably in January. Would that worry you and do you expect the two-wheeler sales to remain sluggish even in the coming months? What impacted it?
A: Some of worries, I do not know how correct they are because of MGNREGA, the money distribution has come down. Two-wheeler sales are largely led by lot of rural sales and rural growth. So perhaps that may have affected sales of two-wheelers.
Four-wheelers passenger cars are mostly the larger suburb, suburban and the city areas and smaller cities and town. There it is the sentiment -- positive signs of the economy -- which is making a difference.
There are two things which will make a big difference one is we have already seen the first interest rate cut and the way the inflation is going with oil prices supporting this reduction of inflation. Further cuts in the interest rates are certainly going to make a big difference in sentiment.
The second is: if the economy grows as we are seeing and salaries go up that would make the big difference. These two things will make a huge difference in four-wheeler sales. EMI versus salary growth. That equation makes the big difference.
On the trucks again, I had said in the past it is a capital good. Infrastructure project getting cleared and financed, the ports, the roads, all these big projects moving will make a big difference in the state of the big four-wheelers of the big trucks and big buses.
Sumaira: For two-wheelers don't you think the kind of pressures they are facing from the export market would continue to weigh on them and that for them it would not be so easy to see a recovery in the coming months?
A: I am not that familiar with what are the dynamics of the two-wheelers except some of the manufacturers have good export market. Bajaj Auto is one of the people who have done extremely well in exports and they rely a lot on that. Very hard for me to truthfully tell you what I think of two-wheeler position next couple of months.
Reema: What do you expect FY15 to end with in terms of total sales for the various segments?
A: From April to December for four-wheelers we were at 2.6-2.7 percent growth on the nine month versus nine months. We will do better than that. We will end up by March may be at 3.50-4 percent compared to last year which is quite good. We were expecting a tough year it is pretty good.
Two-wheelers were running at a closer to 10-11 percent for the nine months and I hope that we can maintain that. The trucks had started showing considerable improvement in the last two or three months if you see the sales every month. It was still very close to last year so something better than last year would be great for the heavy vehicles.
Sumaira: Any expectations from the Budget?
A: I hope this Make in India issue gets the real push because to make 'Make in India' successful, the auto industry is really the linchpin for it. It is 45 percent of the manufacturing industry and unless the automotive industry starts booming, you won't see the trend in capital goods and other things. There is a big trickle down effect of the auto industry.
So auto industry demand has to move up and you will see the Make in India work. We have talked with the government on this we have excess capacity in four-wheelers almost 30-40 percent excess capacity is available. It is a very low hanging fruit some improvement in the demand through interest rate cuts and growth of the economy will help in moving the GDP and the 'Make in India' policy work.
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