Indian Economy: Growth -2

[Naresh]

<b>Indian Automobile Industry in 2006</b>

Based on the trends observed till November 2006, the automobile industry is expected to register a total production of around 10.9 million vehicles in the calendar year January to December 2006 and witness a production growth of 17%. This is up from 14.5% growth witnessed in 2005 over calendar year 2004.

<b>Domestic Sales</b>

The cumulative growth of passenger vehicles is expected to be almost 19% during the calendar year. This is in contrast to less than 7% growth witnessed in 2005 over 2004. Passenger cars are expected to grow at around 20.5% compared to 12.1% for utility vehicles and 16% in MPVs.

A Look at the sub-segments of the passenger cars one notices mixed performances. While mini-cars (-7.2%) and premium cars (-5.6%) are expected to register a negative growth, the compact (25.3%), mid-size (18.9%), executive (32.9%) segments have registered significant growth during the calendar year.

Overall commercial vehicles sales is expected to grow at 30% with both M&HCV and LCVs showing similar trend (around 30% growth). However, it is expected that while the goods carriers will be growing at around 34-35%, the passenger carrier segment is not keeping pace with the overall growth and expected to be only around 5-7%.

For some time now multi-axle vehicles have been growing steadily due to a boom in economy and improved road network. But the Supreme Court verdict on overloading may have given a boost to the growth and demand for high tonnage vehicles. Also, at the lower end, small transport vehicles have created a new space for themselves and expanded the market in a new direction.

Overall two wheeler market will grow by 15% in January to December 2006 over the same period last year. Motorcycles to grow by over 17% while scooters and mopeds would grow by 4-5%.

Three wheeler sales have been encouraging this year (expected to grow at around 20%). Also passenger 3 wheelers have again picked up momentum and expected to grow at 22% compared to 17% for goods carrier unlike the previous year when goods carrier grew at a higher rate than passenger carrier.

<b>Exports</b>

Overall automobile exports are expected to register a 25% growth in the calendar year 2006 over the last calendar year. Passenger vehicle export is expected to be more than 190,000 in 2006 registering a growth of 11.7%. Two-wheeler and commercial vehicle should register over 24% growth in exports during the year while that of three wheelers will be 65%.

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