Auto sector may grow this fiscal

Rating agency Fitch has maintained a stable outlook for the auto sector on the back of falling ownership cost due to lower fuel prices and new launches.

With a consensus expectation of better monsoons this year and new model launches intensifying competition in the passenger car and two-wheeler segments, the agency believes replacement demand will increase, supporting commercial vehicle demand.

“In addition, the 23.5 per cent salary hike for government employees will provide a one-time dema-nd boost to all automobile segments,” the report said.

Industry lobby SIAM, in April, had revised downwards its growth forecast for passenger vehicle sales to 6-8 per cent for the current fiscal, citing high taxation and unfavou-rable environment arou-nd diesel vehicles.

In March too, the Soci-ety of Indian Automobile Manufacturers (SIAM) had lowered its growth forecast for 2016-17 to 11 per cent, from the earlier 12 per cent, after the imposition of infra cess ranging between 1-4 per cent in the Budget.

Car sales logged the highest sales growth in five years at 7.8 per cent in 2015-16, driven largely by new model launches and heavy discounts. Mot-orcycle sales for the fiscal were down 0.24 per cent to 1,07,00,466 units while sales of commercial vehicles rose 11.5 per cent to 6,85,704 units as against 6,14,948 in 2014-15.